California | 94-2404110 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
One Apple Park Way Cupertino, California | 95014 | |
(Address of principal executive offices) | (Zip Code) | |
Common Stock, $0.00001 par value per share 1.000% Notes due 2022 1.375% Notes due 2024 0.875% Notes due 2025 1.625% Notes due 2026 2.000% Notes due 2027 1.375% Notes due 2029 3.050% Notes due 2029 3.600% Notes due 2042 | The Nasdaq Stock Market LLC New York Stock Exchange LLC New York Stock Exchange LLC New York Stock Exchange LLC New York Stock Exchange LLC New York Stock Exchange LLC New York Stock Exchange LLC New York Stock Exchange LLC New York Stock Exchange LLC | |
(Title of each class) | (Name of each exchange on which registered) | |
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ | |||||
Page | ||
Item 1. | Business |
Item 1A. | Risk Factors |
Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
Item 3. | Legal Proceedings |
Item 4. | Mine Safety Disclosures |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Periods | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) | ||||||||||
July 1, 2018 to August 4, 2018: | ||||||||||||||
Open market and privately negotiated purchases | 26,859 | $ | 192.50 | 26,859 | ||||||||||
August 5, 2018 to September 1, 2018: | ||||||||||||||
Open market and privately negotiated purchases | 36,575 | $ | 214.07 | 36,575 | ||||||||||
September 2, 2018 to September 29, 2018: | ||||||||||||||
Open market and privately negotiated purchases | 29,029 | $ | 222.07 | 29,029 | ||||||||||
Total | 92,463 | $ | 70,970 | |||||||||||
(1) | On May 1, 2018, the Company announced the Board of Directors had authorized a program to repurchase up to $100 billion of the Company’s common stock, of which $29.0 billion had been utilized as of September 29, 2018. The remaining $71.0 billion in the table represents the amount available to repurchase shares under the authorized repurchase program as of September 29, 2018. The Company’s share repurchase program does not obligate it to acquire any specific number of shares. Under this program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. |
* | $100 invested on September 27, 2013 in stock or index, including reinvestment of dividends. Data points are the last day of each fiscal year for the Company’s common stock and September 30th for indexes. |
September 2013 | September 2014 | September 2015 | September 2016 | September 2017 | September 2018 | |||||||||||||||||||
Apple Inc. | $ | 100 | $ | 149 | $ | 173 | $ | 174 | $ | 242 | $ | 359 | ||||||||||||
S&P 500 Index | $ | 100 | $ | 120 | $ | 119 | $ | 137 | $ | 163 | $ | 192 | ||||||||||||
S&P Information Technology Index | $ | 100 | $ | 129 | $ | 132 | $ | 162 | $ | 209 | $ | 275 | ||||||||||||
Dow Jones U.S. Technology Supersector Index | $ | 100 | $ | 130 | $ | 130 | $ | 159 | $ | 203 | $ | 266 | ||||||||||||
Item 6. | Selected Financial Data |
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
Net sales | $ | 265,595 | $ | 229,234 | $ | 215,639 | $ | 233,715 | $ | 182,795 | |||||||||
Net income | $ | 59,531 | $ | 48,351 | $ | 45,687 | $ | 53,394 | $ | 39,510 | |||||||||
Earnings per share: | |||||||||||||||||||
Basic | $ | 12.01 | $ | 9.27 | $ | 8.35 | $ | 9.28 | $ | 6.49 | |||||||||
Diluted | $ | 11.91 | $ | 9.21 | $ | 8.31 | $ | 9.22 | $ | 6.45 | |||||||||
Cash dividends declared per share | $ | 2.72 | $ | 2.40 | $ | 2.18 | $ | 1.98 | $ | 1.82 | |||||||||
Shares used in computing earnings per share: | |||||||||||||||||||
Basic | 4,955,377 | 5,217,242 | 5,470,820 | 5,753,421 | 6,085,572 | ||||||||||||||
Diluted | 5,000,109 | 5,251,692 | 5,500,281 | 5,793,069 | 6,122,663 | ||||||||||||||
Total cash, cash equivalents and marketable securities | $ | 237,100 | $ | 268,895 | $ | 237,585 | $ | 205,666 | $ | 155,239 | |||||||||
Total assets | $ | 365,725 | $ | 375,319 | $ | 321,686 | $ | 290,345 | $ | 231,839 | |||||||||
Non-current portion of term debt | $ | 93,735 | $ | 97,207 | $ | 75,427 | $ | 53,329 | $ | 28,987 | |||||||||
Other non-current liabilities | $ | 45,180 | $ | 40,415 | $ | 36,074 | $ | 33,427 | $ | 24,826 | |||||||||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
2018 | Change | 2017 | Change | 2016 | |||||||||||||
Net Sales by Reportable Segment: | |||||||||||||||||
Americas | $ | 112,093 | 16 | % | $ | 96,600 | 12 | % | $ | 86,613 | |||||||
Europe | 62,420 | 14 | % | 54,938 | 10 | % | 49,952 | ||||||||||
Greater China | 51,942 | 16 | % | 44,764 | (8 | )% | 48,492 | ||||||||||
Japan | 21,733 | 23 | % | 17,733 | 5 | % | 16,928 | ||||||||||
Rest of Asia Pacific | 17,407 | 15 | % | 15,199 | 11 | % | 13,654 | ||||||||||
Total net sales | $ | 265,595 | 16 | % | $ | 229,234 | 6 | % | $ | 215,639 | |||||||
Net Sales by Product: | |||||||||||||||||
iPhone (1) | $ | 166,699 | 18 | % | $ | 141,319 | 3 | % | $ | 136,700 | |||||||
iPad (1) | 18,805 | (2 | )% | 19,222 | (7 | )% | 20,628 | ||||||||||
Mac (1) | 25,484 | (1 | )% | 25,850 | 13 | % | 22,831 | ||||||||||
Services (2) | 37,190 | 24 | % | 29,980 | 23 | % | 24,348 | ||||||||||
Other Products (1)(3) | 17,417 | 35 | % | 12,863 | 16 | % | 11,132 | ||||||||||
Total net sales | $ | 265,595 | 16 | % | $ | 229,234 | 6 | % | $ | 215,639 | |||||||
Unit Sales by Product: | |||||||||||||||||
iPhone | 217,722 | — | % | 216,756 | 2 | % | 211,884 | ||||||||||
iPad | 43,535 | — | % | 43,753 | (4 | )% | 45,590 | ||||||||||
Mac | 18,209 | (5 | )% | 19,251 | 4 | % | 18,484 | ||||||||||
(1) | Includes deferrals and amortization of related software upgrade rights and non-software services. |
(2) | Includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other services. Services net sales in 2018 included a favorable one-time item of $236 million in connection with the final resolution of various lawsuits. Services net sales in 2017 included a favorable one-time adjustment of $640 million due to a change in estimate based on the availability of additional supporting information. |
(3) | Includes sales of AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and other Apple-branded and third-party accessories. |
2018 | Change | 2017 | Change | 2016 | |||||||||||||
Net sales | $ | 166,699 | 18 | % | $ | 141,319 | 3 | % | $ | 136,700 | |||||||
Percentage of total net sales | 63 | % | 62 | % | 63 | % | |||||||||||
Unit sales | 217,722 | — | % | 216,756 | 2 | % | 211,884 | ||||||||||
2018 | Change | 2017 | Change | 2016 | |||||||||||||
Net sales | $ | 18,805 | (2 | )% | $ | 19,222 | (7 | )% | $ | 20,628 | |||||||
Percentage of total net sales | 7 | % | 8 | % | 10 | % | |||||||||||
Unit sales | 43,535 | — | % | 43,753 | (4 | )% | 45,590 | ||||||||||
2018 | Change | 2017 | Change | 2016 | |||||||||||||
Net sales | $ | 25,484 | (1 | )% | $ | 25,850 | 13 | % | $ | 22,831 | |||||||
Percentage of total net sales | 10 | % | 11 | % | 11 | % | |||||||||||
Unit sales | 18,209 | (5 | )% | 19,251 | 4 | % | 18,484 | ||||||||||
2018 | Change | 2017 | Change | 2016 | |||||||||||||
Net sales | $ | 37,190 | 24 | % | $ | 29,980 | 23 | % | $ | 24,348 | |||||||
Percentage of total net sales | 14 | % | 13 | % | 11 | % | |||||||||||
2018 | Change | 2017 | Change | 2016 | |||||||||||||
Net sales | $ | 112,093 | 16 | % | $ | 96,600 | 12 | % | $ | 86,613 | |||||||
Percentage of total net sales | 42 | % | 42 | % | 40 | % | |||||||||||
2018 | Change | 2017 | Change | 2016 | |||||||||||||
Net sales | $ | 62,420 | 14 | % | $ | 54,938 | 10 | % | $ | 49,952 | |||||||
Percentage of total net sales | 24 | % | 24 | % | 23 | % | |||||||||||
2018 | Change | 2017 | Change | 2016 | |||||||||||||
Net sales | $ | 51,942 | 16 | % | $ | 44,764 | (8 | )% | $ | 48,492 | |||||||
Percentage of total net sales | 20 | % | 20 | % | 22 | % | |||||||||||
2018 | Change | 2017 | Change | 2016 | |||||||||||||
Net sales | $ | 21,733 | 23 | % | $ | 17,733 | 5 | % | $ | 16,928 | |||||||
Percentage of total net sales | 8 | % | 8 | % | 8 | % | |||||||||||
2018 | Change | 2017 | Change | 2016 | |||||||||||||
Net sales | $ | 17,407 | 15 | % | $ | 15,199 | 11 | % | $ | 13,654 | |||||||
Percentage of total net sales | 7 | % | 7 | % | 6 | % | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net sales | $ | 265,595 | $ | 229,234 | $ | 215,639 | |||||
Cost of sales | 163,756 | 141,048 | 131,376 | ||||||||
Gross margin | $ | 101,839 | $ | 88,186 | $ | 84,263 | |||||
Gross margin percentage | 38.3 | % | 38.5 | % | 39.1 | % | |||||
2018 | Change | 2017 | Change | 2016 | |||||||||||||
Research and development | $ | 14,236 | 23 | % | $ | 11,581 | 15 | % | $ | 10,045 | |||||||
Percentage of total net sales | 5 | % | 5 | % | 5 | % | |||||||||||
Selling, general and administrative | $ | 16,705 | 9 | % | $ | 15,261 | 8 | % | $ | 14,194 | |||||||
Percentage of total net sales | 6 | % | 7 | % | 7 | % | |||||||||||
Total operating expenses | $ | 30,941 | 15 | % | $ | 26,842 | 11 | % | $ | 24,239 | |||||||
Percentage of total net sales | 12 | % | 12 | % | 11 | % | |||||||||||
2018 | Change | 2017 | Change | 2016 | |||||||||||||
Interest and dividend income | $ | 5,686 | $ | 5,201 | $ | 3,999 | |||||||||||
Interest expense | (3,240 | ) | (2,323 | ) | (1,456 | ) | |||||||||||
Other expense, net | (441 | ) | (133 | ) | (1,195 | ) | |||||||||||
Total other income/(expense), net | $ | 2,005 | (27 | )% | $ | 2,745 | 104 | % | $ | 1,348 | |||||||
2018 | 2017 | 2016 | |||||||||
Provision for income taxes | $ | 13,372 | $ | 15,738 | $ | 15,685 | |||||
Effective tax rate | 18.3 | % | 24.6 | % | 25.6 | % | |||||
2018 | 2017 | 2016 | |||||||||
Cash, cash equivalents and marketable securities (1) | $ | 237,100 | $ | 268,895 | $ | 237,585 | |||||
Property, plant and equipment, net | $ | 41,304 | $ | 33,783 | $ | 27,010 | |||||
Commercial paper | $ | 11,964 | $ | 11,977 | $ | 8,105 | |||||
Total term debt | $ | 102,519 | $ | 103,703 | $ | 78,927 | |||||
Working capital | $ | 14,473 | $ | 27,831 | $ | 27,863 | |||||
Cash generated by operating activities (2) | $ | 77,434 | $ | 64,225 | $ | 66,231 | |||||
Cash generated by/(used in) investing activities | $ | 16,066 | $ | (46,446 | ) | $ | (45,977 | ) | |||
Cash used in financing activities (2) | $ | (87,876 | ) | $ | (17,974 | ) | $ | (20,890 | ) | ||
(1) | As of September 29, 2018, total cash, cash equivalents and marketable securities included $20.3 billion that was restricted from general use, related to the State Aid Decision and other agreements. |
(2) | Refer to Note 1, “Summary of Significant Accounting Polices” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for more information on the prior period reclassification related to the Company’s adoption of ASU 2016-09. |
Payments Due in 2019 | Payments Due in 2020–2021 | Payments Due in 2022–2023 | Payments Due After 2023 | Total | |||||||||||||||
Term debt | $ | 8,797 | $ | 18,933 | $ | 17,978 | $ | 58,485 | $ | 104,193 | |||||||||
Operating leases | 1,298 | 2,507 | 1,838 | 3,984 | 9,627 | ||||||||||||||
Manufacturing purchase obligations (1) | 41,548 | 2,469 | 1,183 | — | 45,200 | ||||||||||||||
Other purchase obligations | 3,784 | 2,482 | 681 | 66 | 7,013 | ||||||||||||||
Deemed repatriation tax payable | — | 5,366 | 5,942 | 22,281 | 33,589 | ||||||||||||||
Total | $ | 55,427 | $ | 31,757 | $ | 27,622 | $ | 84,816 | $ | 199,622 | |||||||||
(1) | Represents amount expected to be paid under manufacturing-related supplier arrangements, substantially all of which is noncancelable. |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
Item 8. | Financial Statements and Supplementary Data |
Index to Consolidated Financial Statements | Page | |
Years ended | |||||||||||
September 29, 2018 | September 30, 2017 | September 24, 2016 | |||||||||
Net sales | $ | 265,595 | $ | 229,234 | $ | 215,639 | |||||
Cost of sales | 163,756 | 141,048 | 131,376 | ||||||||
Gross margin | 101,839 | 88,186 | 84,263 | ||||||||
Operating expenses: | |||||||||||
Research and development | 14,236 | 11,581 | 10,045 | ||||||||
Selling, general and administrative | 16,705 | 15,261 | 14,194 | ||||||||
Total operating expenses | 30,941 | 26,842 | 24,239 | ||||||||
Operating income | 70,898 | 61,344 | 60,024 | ||||||||
Other income/(expense), net | 2,005 | 2,745 | 1,348 | ||||||||
Income before provision for income taxes | 72,903 | 64,089 | 61,372 | ||||||||
Provision for income taxes | 13,372 | 15,738 | 15,685 | ||||||||
Net income | $ | 59,531 | $ | 48,351 | $ | 45,687 | |||||
Earnings per share: | |||||||||||
Basic | $ | 12.01 | $ | 9.27 | $ | 8.35 | |||||
Diluted | $ | 11.91 | $ | 9.21 | $ | 8.31 | |||||
Shares used in computing earnings per share: | |||||||||||
Basic | 4,955,377 | 5,217,242 | 5,470,820 | ||||||||
Diluted | 5,000,109 | 5,251,692 | 5,500,281 | ||||||||
Years ended | |||||||||||
September 29, 2018 | September 30, 2017 | September 24, 2016 | |||||||||
Net income | $ | 59,531 | $ | 48,351 | $ | 45,687 | |||||
Other comprehensive income/(loss): | |||||||||||
Change in foreign currency translation, net of tax effects of $(1), $(77) and $8, respectively | (525 | ) | 224 | 75 | |||||||
Change in unrealized gains/losses on derivative instruments: | |||||||||||
Change in fair value of derivatives, net of tax benefit/(expense) of $(149), $(478) and $(7), respectively | 523 | 1,315 | 7 | ||||||||
Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $(104), $475 and $131, respectively | 382 | (1,477 | ) | (741 | ) | ||||||
Total change in unrealized gains/losses on derivative instruments, net of tax | 905 | (162 | ) | (734 | ) | ||||||
Change in unrealized gains/losses on marketable securities: | |||||||||||
Change in fair value of marketable securities, net of tax benefit/(expense) of $1,156, $425 and $(863), respectively | (3,407 | ) | (782 | ) | 1,582 | ||||||
Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $21, $35 and $(31), respectively | 1 | (64 | ) | 56 | |||||||
Total change in unrealized gains/losses on marketable securities, net of tax | (3,406 | ) | (846 | ) | 1,638 | ||||||
Total other comprehensive income/(loss) | (3,026 | ) | (784 | ) | 979 | ||||||
Total comprehensive income | $ | 56,505 | $ | 47,567 | $ | 46,666 | |||||
September 29, 2018 | September 30, 2017 | ||||||
ASSETS: | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 25,913 | $ | 20,289 | |||
Marketable securities | 40,388 | 53,892 | |||||
Accounts receivable, net | 23,186 | 17,874 | |||||
Inventories | 3,956 | 4,855 | |||||
Vendor non-trade receivables | 25,809 | 17,799 | |||||
Other current assets | 12,087 | 13,936 | |||||
Total current assets | 131,339 | 128,645 | |||||
Non-current assets: | |||||||
Marketable securities | 170,799 | 194,714 | |||||
Property, plant and equipment, net | 41,304 | 33,783 | |||||
Other non-current assets | 22,283 | 18,177 | |||||
Total non-current assets | 234,386 | 246,674 | |||||
Total assets | $ | 365,725 | $ | 375,319 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY: | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 55,888 | $ | 44,242 | |||
Other current liabilities | 32,687 | 30,551 | |||||
Deferred revenue | 7,543 | 7,548 | |||||
Commercial paper | 11,964 | 11,977 | |||||
Term debt | 8,784 | 6,496 | |||||
Total current liabilities | 116,866 | 100,814 | |||||
Non-current liabilities: | |||||||
Deferred revenue | 2,797 | 2,836 | |||||
Term debt | 93,735 | 97,207 | |||||
Other non-current liabilities | 45,180 | 40,415 | |||||
Total non-current liabilities | 141,712 | 140,458 | |||||
Total liabilities | 258,578 | 241,272 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,754,986 and 5,126,201 shares issued and outstanding, respectively | 40,201 | 35,867 | |||||
Retained earnings | 70,400 | 98,330 | |||||
Accumulated other comprehensive income/(loss) | (3,454 | ) | (150 | ) | |||
Total shareholders’ equity | 107,147 | 134,047 | |||||
Total liabilities and shareholders’ equity | $ | 365,725 | $ | 375,319 | |||
Common Stock and Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Total Shareholders’ Equity | |||||||||||||||
Shares | Amount | |||||||||||||||||
Balances as of September 26, 2015 | 5,578,753 | $ | 27,416 | $ | 92,284 | $ | (345 | ) | $ | 119,355 | ||||||||
Net income | — | — | 45,687 | — | 45,687 | |||||||||||||
Other comprehensive income/(loss) | — | — | — | 979 | 979 | |||||||||||||
Dividends and dividend equivalents declared at $2.18 per share or RSU | — | — | (12,188 | ) | — | (12,188 | ) | |||||||||||
Repurchase of common stock | (279,609 | ) | — | (29,000 | ) | — | (29,000 | ) | ||||||||||
Share-based compensation | — | 4,262 | — | — | 4,262 | |||||||||||||
Common stock issued, net of shares withheld for employee taxes | 37,022 | (806 | ) | (419 | ) | — | (1,225 | ) | ||||||||||
Tax benefit from equity awards, including transfer pricing adjustments | — | 379 | — | — | 379 | |||||||||||||
Balances as of September 24, 2016 | 5,336,166 | 31,251 | 96,364 | 634 | 128,249 | |||||||||||||
Net income | — | — | 48,351 | — | 48,351 | |||||||||||||
Other comprehensive income/(loss) | — | — | — | (784 | ) | (784 | ) | |||||||||||
Dividends and dividend equivalents declared at $2.40 per share or RSU | — | — | (12,803 | ) | — | (12,803 | ) | |||||||||||
Repurchase of common stock | (246,496 | ) | — | (33,001 | ) | — | (33,001 | ) | ||||||||||
Share-based compensation | — | 4,909 | — | — | 4,909 | |||||||||||||
Common stock issued, net of shares withheld for employee taxes | 36,531 | (913 | ) | (581 | ) | — | (1,494 | ) | ||||||||||
Tax benefit from equity awards, including transfer pricing adjustments | — | 620 | — | — | 620 | |||||||||||||
Balances as of September 30, 2017 | 5,126,201 | 35,867 | 98,330 | (150 | ) | 134,047 | ||||||||||||
Cumulative effect of change in accounting principle | — | — | 278 | (278 | ) | — | ||||||||||||
Net income | — | — | 59,531 | — | 59,531 | |||||||||||||
Other comprehensive income/(loss) | — | — | — | (3,026 | ) | (3,026 | ) | |||||||||||
Dividends and dividend equivalents declared at $2.72 per share or RSU | — | — | (13,735 | ) | — | (13,735 | ) | |||||||||||
Repurchase of common stock | (405,549 | ) | — | (73,056 | ) | — | (73,056 | ) | ||||||||||
Share-based compensation | — | 5,443 | — | — | 5,443 | |||||||||||||
Common stock issued, net of shares withheld for employee taxes | 34,334 | (1,109 | ) | (948 | ) | — | (2,057 | ) | ||||||||||
Balances as of September 29, 2018 | 4,754,986 | $ | 40,201 | $ | 70,400 | $ | (3,454 | ) | $ | 107,147 | ||||||||
Years ended | |||||||||||
September 29, 2018 | September 30, 2017 | September 24, 2016 | |||||||||
Cash and cash equivalents, beginning of the year | $ | 20,289 | $ | 20,484 | $ | 21,120 | |||||
Operating activities: | |||||||||||
Net income | 59,531 | 48,351 | 45,687 | ||||||||
Adjustments to reconcile net income to cash generated by operating activities: | |||||||||||
Depreciation and amortization | 10,903 | 10,157 | 10,505 | ||||||||
Share-based compensation expense | 5,340 | 4,840 | 4,210 | ||||||||
Deferred income tax expense/(benefit) | (32,590 | ) | 5,966 | 4,938 | |||||||
Other | (444 | ) | (166 | ) | 486 | ||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable, net | (5,322 | ) | (2,093 | ) | 527 | ||||||
Inventories | 828 | (2,723 | ) | 217 | |||||||
Vendor non-trade receivables | (8,010 | ) | (4,254 | ) | (51 | ) | |||||
Other current and non-current assets | (423 | ) | (5,318 | ) | 1,055 | ||||||
Accounts payable | 9,175 | 8,966 | 2,117 | ||||||||
Deferred revenue | (44 | ) | (626 | ) | (1,554 | ) | |||||
Other current and non-current liabilities | 38,490 | 1,125 | (1,906 | ) | |||||||
Cash generated by operating activities | 77,434 | 64,225 | 66,231 | ||||||||
Investing activities: | |||||||||||
Purchases of marketable securities | (71,356 | ) | (159,486 | ) | (142,428 | ) | |||||
Proceeds from maturities of marketable securities | 55,881 | 31,775 | 21,258 | ||||||||
Proceeds from sales of marketable securities | 47,838 | 94,564 | 90,536 | ||||||||
Payments for acquisition of property, plant and equipment | (13,313 | ) | (12,451 | ) | (12,734 | ) | |||||
Payments made in connection with business acquisitions, net | (721 | ) | (329 | ) | (297 | ) | |||||
Purchases of non-marketable securities | (1,871 | ) | (521 | ) | (1,388 | ) | |||||
Proceeds from non-marketable securities | 353 | 126 | — | ||||||||
Other | (745 | ) | (124 | ) | (924 | ) | |||||
Cash generated by/(used in) investing activities | 16,066 | (46,446 | ) | (45,977 | ) | ||||||
Financing activities: | |||||||||||
Proceeds from issuance of common stock | 669 | 555 | 495 | ||||||||
Payments for taxes related to net share settlement of equity awards | (2,527 | ) | (1,874 | ) | (1,570 | ) | |||||
Payments for dividends and dividend equivalents | (13,712 | ) | (12,769 | ) | (12,150 | ) | |||||
Repurchases of common stock | (72,738 | ) | (32,900 | ) | (29,722 | ) | |||||
Proceeds from issuance of term debt, net | 6,969 | 28,662 | 24,954 | ||||||||
Repayments of term debt | (6,500 | ) | (3,500 | ) | (2,500 | ) | |||||
Change in commercial paper, net | (37 | ) | 3,852 | (397 | ) | ||||||
Cash used in financing activities | (87,876 | ) | (17,974 | ) | (20,890 | ) | |||||
Increase/(Decrease) in cash and cash equivalents | 5,624 | (195 | ) | (636 | ) | ||||||
Cash and cash equivalents, end of the year | $ | 25,913 | $ | 20,289 | $ | 20,484 | |||||
Supplemental cash flow disclosure: | |||||||||||
Cash paid for income taxes, net | $ | 10,417 | $ | 11,591 | $ | 10,444 | |||||
Cash paid for interest | $ | 3,022 | $ | 2,092 | $ | 1,316 | |||||
2018 | 2017 | 2016 | |||||||||
Numerator: | |||||||||||
Net income | $ | 59,531 | $ | 48,351 | $ | 45,687 | |||||
Denominator: | |||||||||||
Weighted-average basic shares outstanding | 4,955,377 | 5,217,242 | 5,470,820 | ||||||||
Effect of dilutive securities | 44,732 | 34,450 | 29,461 | ||||||||
Weighted-average diluted shares | 5,000,109 | 5,251,692 | 5,500,281 | ||||||||
Basic earnings per share | $ | 12.01 | $ | 9.27 | $ | 8.35 | |||||
Diluted earnings per share | $ | 11.91 | $ | 9.21 | $ | 8.31 | |||||
2018 | |||||||||||||||||||||||||||
Adjusted Cost | Unrealized Gains | Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-Term Marketable Securities | Long-Term Marketable Securities | |||||||||||||||||||||
Cash | $ | 11,575 | $ | — | $ | — | $ | 11,575 | $ | 11,575 | $ | — | $ | — | |||||||||||||
Level 1 (1): | |||||||||||||||||||||||||||
Money market funds | 8,083 | — | — | 8,083 | 8,083 | — | — | ||||||||||||||||||||
Mutual funds | 799 | — | (116 | ) | 683 | — | 683 | — | |||||||||||||||||||
Subtotal | 8,882 | — | (116 | ) | 8,766 | 8,083 | 683 | — | |||||||||||||||||||
Level 2 (2): | |||||||||||||||||||||||||||
U.S. Treasury securities | 47,296 | — | (1,202 | ) | 46,094 | 1,613 | 7,606 | 36,875 | |||||||||||||||||||
U.S. agency securities | 4,127 | — | (48 | ) | 4,079 | 1,732 | 360 | 1,987 | |||||||||||||||||||
Non-U.S. government securities | 21,601 | 49 | (250 | ) | 21,400 | — | 3,355 | 18,045 | |||||||||||||||||||
Certificates of deposit and time deposits | 3,074 | — | — | 3,074 | 1,247 | 1,330 | 497 | ||||||||||||||||||||
Commercial paper | 2,573 | — | — | 2,573 | 1,663 | 910 | — | ||||||||||||||||||||
Corporate securities | 123,001 | 152 | (2,038 | ) | 121,115 | — | 25,162 | 95,953 | |||||||||||||||||||
Municipal securities | 946 | — | (12 | ) | 934 | — | 178 | 756 | |||||||||||||||||||
Mortgage- and asset-backed securities | 18,105 | 8 | (623 | ) | 17,490 | — | 804 | 16,686 | |||||||||||||||||||
Subtotal | 220,723 | 209 | (4,173 | ) | 216,759 | 6,255 | 39,705 | 170,799 | |||||||||||||||||||
Total (3) | $ | 241,180 | $ | 209 | $ | (4,289 | ) | $ | 237,100 | $ | 25,913 | $ | 40,388 | $ | 170,799 | ||||||||||||
2017 | |||||||||||||||||||||||||||
Adjusted Cost | Unrealized Gains | Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-Term Marketable Securities | Long-Term Marketable Securities | |||||||||||||||||||||
Cash | $ | 7,982 | $ | — | $ | — | $ | 7,982 | $ | 7,982 | $ | — | $ | — | |||||||||||||
Level 1 (1): | |||||||||||||||||||||||||||
Money market funds | 6,534 | — | — | 6,534 | 6,534 | — | — | ||||||||||||||||||||
Mutual funds | 799 | — | (88 | ) | 711 | — | 711 | — | |||||||||||||||||||
Subtotal | 7,333 | — | (88 | ) | 7,245 | 6,534 | 711 | — | |||||||||||||||||||
Level 2 (2): | |||||||||||||||||||||||||||
U.S. Treasury securities | 55,254 | 58 | (230 | ) | 55,082 | 865 | 17,228 | 36,989 | |||||||||||||||||||
U.S. agency securities | 5,162 | 2 | (9 | ) | 5,155 | 1,439 | 2,057 | 1,659 | |||||||||||||||||||
Non-U.S. government securities | 7,827 | 210 | (37 | ) | 8,000 | 9 | 123 | 7,868 | |||||||||||||||||||
Certificates of deposit and time deposits | 5,832 | — | — | 5,832 | 1,142 | 3,918 | 772 | ||||||||||||||||||||
Commercial paper | 3,640 | — | — | 3,640 | 2,146 | 1,494 | — | ||||||||||||||||||||
Corporate securities | 152,724 | 969 | (242 | ) | 153,451 | 172 | 27,591 | 125,688 | |||||||||||||||||||
Municipal securities | 961 | 4 | (1 | ) | 964 | — | 114 | 850 | |||||||||||||||||||
Mortgage- and asset-backed securities | 21,684 | 35 | (175 | ) | 21,544 | — | 656 | 20,888 | |||||||||||||||||||
Subtotal | 253,084 | 1,278 | (694 | ) | 253,668 | 5,773 | 53,181 | 194,714 | |||||||||||||||||||
Total | $ | 268,399 | $ | 1,278 | $ | (782 | ) | $ | 268,895 | $ | 20,289 | $ | 53,892 | $ | 194,714 | ||||||||||||
(1) | Level 1 fair value estimates are based on quoted prices in active markets for identical assets or liabilities. |
(2) | Level 2 fair value estimates are based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
(3) | As of September 29, 2018, total cash, cash equivalents and marketable securities included $20.3 billion that was restricted from general use, related to the State Aid Decision (refer to Note 4, “Income Taxes”) and other agreements. |
2018 | |||||||||||
Continuous Unrealized Losses | |||||||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||
Fair value of marketable securities | $ | 126,238 | $ | 60,599 | $ | 186,837 | |||||
Unrealized losses | $ | (2,400 | ) | $ | (1,889 | ) | $ | (4,289 | ) | ||
2017 | |||||||||||
Continuous Unrealized Losses | |||||||||||
Less than 12 Months | 12 Months or Greater | Total | |||||||||
Fair value of marketable securities | $ | 101,986 | $ | 8,290 | $ | 110,276 | |||||
Unrealized losses | $ | (596 | ) | $ | (186 | ) | $ | (782 | ) | ||
2018 | |||||||||||
Fair Value of Derivatives Designated as Hedge Instruments | Fair Value of Derivatives Not Designated as Hedge Instruments | Total Fair Value | |||||||||
Derivative assets (1): | |||||||||||
Foreign exchange contracts | $ | 1,015 | $ | 259 | $ | 1,274 | |||||
Derivative liabilities (2): | |||||||||||
Foreign exchange contracts | $ | 543 | $ | 137 | $ | 680 | |||||
Interest rate contracts | $ | 1,456 | $ | — | $ | 1,456 | |||||
2017 | |||||||||||
Fair Value of Derivatives Designated as Hedge Instruments | Fair Value of Derivatives Not Designated as Hedge Instruments | Total Fair Value | |||||||||
Derivative assets (1): | |||||||||||
Foreign exchange contracts | $ | 1,049 | $ | 363 | $ | 1,412 | |||||
Interest rate contracts | $ | 218 | $ | — | $ | 218 | |||||
Derivative liabilities (2): | |||||||||||
Foreign exchange contracts | $ | 759 | $ | 501 | $ | 1,260 | |||||
Interest rate contracts | $ | 303 | $ | — | $ | 303 | |||||
(1) | The fair value of derivative assets is measured using Level 2 fair value inputs and is recorded as other current assets and other non-current assets in the Consolidated Balance Sheets. |
(2) | The fair value of derivative liabilities is measured using Level 2 fair value inputs and is recorded as other current liabilities and other non-current liabilities in the Consolidated Balance Sheets. |
2018 | 2017 | 2016 | |||||||||
Gains/(Losses) recognized in OCI – effective portion: | |||||||||||
Cash flow hedges: | |||||||||||
Foreign exchange contracts | $ | 682 | $ | 1,797 | $ | 109 | |||||
Interest rate contracts | 1 | 7 | (57 | ) | |||||||
Total | $ | 683 | $ | 1,804 | $ | 52 | |||||
Net investment hedges: | |||||||||||
Foreign currency debt | $ | 4 | $ | 67 | $ | (258 | ) | ||||
Gains/(Losses) reclassified from AOCI into net income – effective portion: | |||||||||||
Cash flow hedges: | |||||||||||
Foreign exchange contracts | $ | (482 | ) | $ | 1,958 | $ | 885 | ||||
Interest rate contracts | 1 | (2 | ) | (11 | ) | ||||||
Total | $ | (481 | ) | $ | 1,956 | $ | 874 | ||||
Gains/(Losses) on derivative instruments: | |||||||||||
Fair value hedges: | |||||||||||
Foreign exchange contracts | $ | (168 | ) | $ | — | $ | — | ||||
Interest rate contracts | (1,363 | ) | (810 | ) | 341 | ||||||
Total | $ | (1,531 | ) | $ | (810 | ) | $ | 341 | |||
Gains/(Losses) related to hedged items: | |||||||||||
Fair value hedges: | |||||||||||
Marketable securities | $ | 167 | $ | — | $ | — | |||||
Fixed-rate debt | 1,363 | 810 | (341 | ) | |||||||
Total | $ | 1,530 | $ | 810 | $ | (341 | ) | ||||
2018 | 2017 | ||||||||||||||
Notional Amount | Credit Risk Amount | Notional Amount | Credit Risk Amount | ||||||||||||
Instruments designated as accounting hedges: | |||||||||||||||
Foreign exchange contracts | $ | 65,368 | $ | 1,015 | $ | 56,156 | $ | 1,049 | |||||||
Interest rate contracts | $ | 33,250 | $ | — | $ | 33,000 | $ | 218 | |||||||
Instruments not designated as accounting hedges: | |||||||||||||||
Foreign exchange contracts | $ | 63,062 | $ | 259 | $ | 69,774 | $ | 363 | |||||||
2018 | 2017 | ||||||
Land and buildings | $ | 16,216 | $ | 13,587 | |||
Machinery, equipment and internal-use software | 65,982 | 54,210 | |||||
Leasehold improvements | 8,205 | 7,279 | |||||
Gross property, plant and equipment | 90,403 | 75,076 | |||||
Accumulated depreciation and amortization | (49,099 | ) | (41,293 | ) | |||
Total property, plant and equipment, net | $ | 41,304 | $ | 33,783 | |||
2018 | 2017 | ||||||
Long-term taxes payable | $ | 33,589 | $ | 257 | |||
Deferred tax liabilities | 426 | 31,504 | |||||
Other non-current liabilities | 11,165 | 8,654 | |||||
Total other non-current liabilities | $ | 45,180 | $ | 40,415 | |||
2018 | 2017 | 2016 | |||||||||
Interest and dividend income | $ | 5,686 | $ | 5,201 | $ | 3,999 | |||||
Interest expense | (3,240 | ) | (2,323 | ) | (1,456 | ) | |||||
Other expense, net | (441 | ) | (133 | ) | (1,195 | ) | |||||
Total other income/(expense), net | $ | 2,005 | $ | 2,745 | $ | 1,348 | |||||
2018 | 2017 | 2016 | |||||||||
Federal: | |||||||||||
Current | $ | 41,425 | $ | 7,842 | $ | 7,652 | |||||
Deferred | (33,819 | ) | 5,980 | 5,043 | |||||||
Total | 7,606 | 13,822 | 12,695 | ||||||||
State: | |||||||||||
Current | 551 | 259 | 990 | ||||||||
Deferred | 48 | 2 | (138 | ) | |||||||
Total | 599 | 261 | 852 | ||||||||
Foreign: | |||||||||||
Current | 3,986 | 1,671 | 2,105 | ||||||||
Deferred | 1,181 | (16 | ) | 33 | |||||||
Total | 5,167 | 1,655 | 2,138 | ||||||||
Provision for income taxes | $ | 13,372 | $ | 15,738 | $ | 15,685 | |||||
2018 | 2017 | 2016 | |||||||||
Computed expected tax | $ | 17,890 | $ | 22,431 | $ | 21,480 | |||||
State taxes, net of federal effect | 271 | 185 | 553 | ||||||||
Impacts of the Act | 1,515 | — | — | ||||||||
Earnings of foreign subsidiaries | (5,606 | ) | (6,135 | ) | (5,582 | ) | |||||
Domestic production activities deduction | (195 | ) | (209 | ) | (382 | ) | |||||
Research and development credit, net | (560 | ) | (678 | ) | (371 | ) | |||||
Other | 57 | 144 | (13 | ) | |||||||
Provision for income taxes | $ | 13,372 | $ | 15,738 | $ | 15,685 | |||||
Effective tax rate | 18.3 | % | 24.6 | % | 25.6 | % | |||||
2018 | 2017 | ||||||
Deferred tax assets: | |||||||
Accrued liabilities and other reserves | $ | 3,151 | $ | 4,019 | |||
Basis of capital assets | 137 | 1,230 | |||||
Deferred revenue | 1,141 | 1,521 | |||||
Deferred cost sharing | — | 667 | |||||
Share-based compensation | 513 | 703 | |||||
Unrealized losses | 871 | — | |||||
Other | 797 | 834 | |||||
Total deferred tax assets | 6,610 | 8,974 | |||||
Deferred tax liabilities: | |||||||
Earnings of foreign subsidiaries | 275 | 36,355 | |||||
Other | 501 | 207 | |||||
Total deferred tax liabilities | 776 | 36,562 | |||||
Net deferred tax assets/(liabilities) | $ | 5,834 | $ | (27,588 | ) | ||
2018 | 2017 | 2016 | |||||||||
Beginning balances | $ | 8,407 | $ | 7,724 | $ | 6,900 | |||||
Increases related to tax positions taken during a prior year | 2,431 | 333 | 1,121 | ||||||||
Decreases related to tax positions taken during a prior year | (2,212 | ) | (952 | ) | (257 | ) | |||||
Increases related to tax positions taken during the current year | 1,824 | 1,880 | 1,578 | ||||||||
Decreases related to settlements with taxing authorities | (756 | ) | (539 | ) | (1,618 | ) | |||||
Decreases related to expiration of statute of limitations | — | (39 | ) | — | |||||||
Ending balances | $ | 9,694 | $ | 8,407 | $ | 7,724 | |||||
2018 | 2017 | 2016 | |||||||||
Maturities 90 days or less: | |||||||||||
Proceeds from/(Repayments of) commercial paper, net | $ | 1,044 | $ | (1,782 | ) | $ | (869 | ) | |||
Maturities greater than 90 days: | |||||||||||
Proceeds from commercial paper | 14,555 | 17,932 | 3,632 | ||||||||
Repayments of commercial paper | (15,636 | ) | (12,298 | ) | (3,160 | ) | |||||
Proceeds from/(Repayments of) commercial paper, net | (1,081 | ) | 5,634 | 472 | |||||||
Total change in commercial paper, net | $ | (37 | ) | $ | 3,852 | $ | (397 | ) | |||
Maturities (calendar year) | 2018 | 2017 | |||||||||||||||||||||
Amount (in millions) | Effective Interest Rate | Amount (in millions) | Effective Interest Rate | ||||||||||||||||||||
2013 debt issuance of $17.0 billion: | |||||||||||||||||||||||
Floating-rate notes | — | $ | — | — | % | $ | 2,000 | 1.10 | % | ||||||||||||||
Fixed-rate 2.400% – 3.850% notes | 2023 | – | 2043 | 8,500 | 2.44% | – | 3.91 | % | 12,500 | 1.08% | – | 3.91 | % | ||||||||||
2014 debt issuance of $12.0 billion: | |||||||||||||||||||||||
Floating-rate notes | 2019 | 1,000 | 2.64 | % | 1,000 | 1.61 | % | ||||||||||||||||
Fixed-rate 2.100% – 4.450% notes | 2019 | – | 2044 | 8,500 | 2.64% | – | 4.48 | % | 8,500 | 1.61% | – | 4.48 | % | ||||||||||
2015 debt issuances of $27.3 billion: | |||||||||||||||||||||||
Floating-rate notes | 2019 | – | 2020 | 1,507 | 1.87% | – | 2.64 | % | 1,549 | 1.56% | – | 1.87 | % | ||||||||||
Fixed-rate 0.350% – 4.375% notes | 2019 | – | 2045 | 24,410 | 0.28% | – | 4.51 | % | 24,522 | 0.28% | – | 4.51 | % | ||||||||||
2016 debt issuances of $24.9 billion: | |||||||||||||||||||||||
Floating-rate notes | 2019 | – | 2021 | 1,350 | 2.48% | – | 3.44 | % | 1,350 | 1.45% | – | 2.44 | % | ||||||||||
Fixed-rate 1.100% – 4.650% notes | 2019 | – | 2046 | 23,059 | 1.13% | – | 4.78 | % | 23,645 | 1.13% | – | 4.78 | % | ||||||||||
2017 debt issuances of $28.7 billion: | |||||||||||||||||||||||
Floating-rate notes | 2019 | – | 2022 | 3,250 | 2.41% | – | 2.84 | % | 3,250 | 1.38% | – | 1.81 | % | ||||||||||
Fixed-rate 0.875% – 4.300% notes | 2019 | – | 2047 | 25,617 | 1.54% | – | 4.30 | % | 25,705 | 1.51% | – | 4.30 | % | ||||||||||
First quarter 2018 debt issuance of $7.0 billion: | |||||||||||||||||||||||
Fixed-rate 1.800% notes | 2019 | 1,000 | 1.83 | % | — | — | % | ||||||||||||||||
Fixed-rate 2.000% notes | 2020 | 1,000 | 2.03 | % | — | — | % | ||||||||||||||||
Fixed-rate 2.400% notes | 2023 | 750 | 2.66 | % | — | — | % | ||||||||||||||||
Fixed-rate 2.750% notes | 2025 | 1,500 | 2.77 | % | — | — | % | ||||||||||||||||
Fixed-rate 3.000% notes | 2027 | 1,500 | 3.05 | % | — | — | % | ||||||||||||||||
Fixed-rate 3.750% notes | 2047 | 1,250 | 3.80 | % | — | — | % | ||||||||||||||||
Total term debt | 104,193 | 104,021 | |||||||||||||||||||||
Unamortized premium/(discount) and issuance costs, net | (218 | ) | (225 | ) | |||||||||||||||||||
Hedge accounting fair value adjustments | (1,456 | ) | (93 | ) | |||||||||||||||||||
Less: Current portion of term debt | (8,784 | ) | (6,496 | ) | |||||||||||||||||||
Total non-current portion of term debt | $ | 93,735 | $ | 97,207 | |||||||||||||||||||
2019 | $ | 8,797 | |
2020 | 10,183 | ||
2021 | 8,750 | ||
2022 | 8,583 | ||
2023 | 9,395 | ||
Thereafter | 58,485 | ||
Total term debt | $ | 104,193 | |
Comprehensive Income Components | Financial Statement Line Item | 2018 | 2017 | |||||||
Unrealized (gains)/losses on derivative instruments: | ||||||||||
Foreign exchange contracts | Net sales | $ | 214 | $ | (662 | ) | ||||
Cost of sales | (70 | ) | (654 | ) | ||||||
Other income/(expense), net | 344 | (638 | ) | |||||||
Interest rate contracts | Other income/(expense), net | (2 | ) | 2 | ||||||
486 | (1,952 | ) | ||||||||
Unrealized (gains)/losses on marketable securities | Other income/(expense), net | (20 | ) | (99 | ) | |||||
Total amounts reclassified from AOCI | $ | 466 | $ | (2,051 | ) | |||||
Cumulative Foreign Currency Translation | Unrealized Gains/Losses on Derivative Instruments | Unrealized Gains/Losses on Marketable Securities | Total | ||||||||||||
Balances as of September 24, 2016 | $ | (578 | ) | $ | 38 | $ | 1,174 | $ | 634 | ||||||
Other comprehensive income/(loss) before reclassifications | 301 | 1,793 | (1,207 | ) | 887 | ||||||||||
Amounts reclassified from AOCI | — | (1,952 | ) | (99 | ) | (2,051 | ) | ||||||||
Tax effect | (77 | ) | (3 | ) | 460 | 380 | |||||||||
Other comprehensive income/(loss) | 224 | (162 | ) | (846 | ) | (784 | ) | ||||||||
Balances as of September 30, 2017 | (354 | ) | (124 | ) | 328 | (150 | ) | ||||||||
Other comprehensive income/(loss) before reclassifications | (524 | ) | 672 | (4,563 | ) | (4,415 | ) | ||||||||
Amounts reclassified from AOCI | — | 486 | (20 | ) | 466 | ||||||||||
Tax effect | (1 | ) | (253 | ) | 1,177 | 923 | |||||||||
Other comprehensive income/(loss) | (525 | ) | 905 | (3,406 | ) | (3,026 | ) | ||||||||
Cumulative effect of change in accounting principle (1) | (176 | ) | 29 | (131 | ) | (278 | ) | ||||||||
Balances as of September 29, 2018 | $ | (1,055 | ) | $ | 810 | $ | (3,209 | ) | $ | (3,454 | ) | ||||
(1) | Refer to Note 4, “Income Taxes” for more information on the Company’s adoption of ASU 2018-02 in 2018. |
Number of RSUs (in thousands) | Weighted-Average Grant Date Fair Value Per RSU | Aggregate Fair Value (in millions) | ||||||||
Balance as of September 26, 2015 | 101,467 | $ | 85.77 | |||||||
RSUs granted | 49,468 | $ | 109.28 | |||||||
RSUs vested | (46,313 | ) | $ | 84.44 | ||||||
RSUs canceled | (5,533 | ) | $ | 96.48 | ||||||
Balance as of September 24, 2016 | 99,089 | $ | 97.54 | |||||||
RSUs granted | 50,112 | $ | 121.65 | |||||||
RSUs vested | (45,735 | ) | $ | 95.48 | ||||||
RSUs canceled | (5,895 | ) | $ | 106.87 | ||||||
Balance as of September 30, 2017 | 97,571 | $ | 110.33 | |||||||
RSUs granted | 45,351 | $ | 162.86 | |||||||
RSUs vested | (44,718 | ) | $ | 111.24 | ||||||
RSUs canceled | (6,049 | ) | $ | 127.82 | ||||||
Balance as of September 29, 2018 | 92,155 | $ | 134.60 | $ | 20,803 | |||||
2018 | 2017 | 2016 | |||||||||
Cost of sales | $ | 1,010 | $ | 877 | $ | 769 | |||||
Research and development | 2,668 | 2,299 | 1,889 | ||||||||
Selling, general and administrative | 1,662 | 1,664 | 1,552 | ||||||||
Total share-based compensation expense | $ | 5,340 | $ | 4,840 | $ | 4,210 | |||||
2018 | 2017 | 2016 | |||||||||
Beginning accrued warranty and related costs | $ | 3,834 | $ | 3,702 | $ | 4,780 | |||||
Cost of warranty claims | (4,115 | ) | (4,322 | ) | (4,663 | ) | |||||
Accruals for product warranty | 3,973 | 4,454 | 3,585 | ||||||||
Ending accrued warranty and related costs | $ | 3,692 | $ | 3,834 | $ | 3,702 | |||||
2019 | $ | 1,298 | |
2020 | 1,289 | ||
2021 | 1,218 | ||
2022 | 1,038 | ||
2023 | 800 | ||
Thereafter | 3,984 | ||
Total | $ | 9,627 | |
2019 | $ | 2,447 | |
2020 | 3,202 | ||
2021 | 1,749 | ||
2022 | 1,596 | ||
2023 | 268 | ||
Thereafter | 66 | ||
Total | $ | 9,328 | |
2018 | 2017 | 2016 | |||||||||
Americas: | |||||||||||
Net sales | $ | 112,093 | $ | 96,600 | $ | 86,613 | |||||
Operating income | $ | 34,864 | $ | 30,684 | $ | 28,172 | |||||
Europe: | |||||||||||
Net sales | $ | 62,420 | $ | 54,938 | $ | 49,952 | |||||
Operating income | $ | 19,955 | $ | 16,514 | $ | 15,348 | |||||
Greater China: | |||||||||||
Net sales | $ | 51,942 | $ | 44,764 | $ | 48,492 | |||||
Operating income | $ | 19,742 | $ | 17,032 | $ | 18,835 | |||||
Japan: | |||||||||||
Net sales | $ | 21,733 | $ | 17,733 | $ | 16,928 | |||||
Operating income | $ | 9,500 | $ | 8,097 | $ | 7,165 | |||||
Rest of Asia Pacific: | |||||||||||
Net sales | $ | 17,407 | $ | 15,199 | $ | 13,654 | |||||
Operating income | $ | 6,181 | $ | 5,304 | $ | 4,781 | |||||
2018 | 2017 | 2016 | |||||||||
Segment operating income | $ | 90,242 | $ | 77,631 | $ | 74,301 | |||||
Research and development expense | (14,236 | ) | (11,581 | ) | (10,045 | ) | |||||
Other corporate expenses, net | (5,108 | ) | (4,706 | ) | (4,232 | ) | |||||
Total operating income | $ | 70,898 | $ | 61,344 | $ | 60,024 | |||||
2018 | 2017 | 2016 | |||||||||
Net sales: | |||||||||||
U.S. | $ | 98,061 | $ | 84,339 | $ | 75,667 | |||||
China (1) | 51,942 | 44,764 | 48,492 | ||||||||
Other countries | 115,592 | 100,131 | 91,480 | ||||||||
Total net sales | $ | 265,595 | $ | 229,234 | $ | 215,639 | |||||
2018 | 2017 | ||||||
Long-lived assets: | |||||||
U.S. | $ | 23,963 | $ | 20,637 | |||
China (1) | 13,268 | 10,211 | |||||
Other countries | 4,073 | 2,935 | |||||
Total long-lived assets | $ | 41,304 | $ | 33,783 | |||
(1) | China includes Hong Kong and Taiwan. Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure. |
2018 | 2017 | 2016 | |||||||||
iPhone (1) | $ | 166,699 | $ | 141,319 | $ | 136,700 | |||||
iPad (1) | 18,805 | 19,222 | 20,628 | ||||||||
Mac (1) | 25,484 | 25,850 | 22,831 | ||||||||
Services (2) | 37,190 | 29,980 | 24,348 | ||||||||
Other Products (1)(3) | 17,417 | 12,863 | 11,132 | ||||||||
Total net sales | $ | 265,595 | $ | 229,234 | $ | 215,639 | |||||
(1) | Includes deferrals and amortization of related software upgrade rights and non-software services. |
(2) | Includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other services. Services net sales in 2018 included a favorable one-time item of $236 million in connection with the final resolution of various lawsuits. Services net sales in 2017 included a favorable one-time adjustment of $640 million due to a change in estimate based on the availability of additional supporting information. |
(3) | Includes sales of AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and other Apple-branded and third-party accessories. |
Fourth Quarter | Third Quarter | Second Quarter | First Quarter | ||||||||||||
2018: | |||||||||||||||
Net sales | $ | 62,900 | $ | 53,265 | $ | 61,137 | $ | 88,293 | |||||||
Gross margin | $ | 24,084 | $ | 20,421 | $ | 23,422 | $ | 33,912 | |||||||
Net income | $ | 14,125 | $ | 11,519 | $ | 13,822 | $ | 20,065 | |||||||
Earnings per share (1): | |||||||||||||||
Basic | $ | 2.94 | $ | 2.36 | $ | 2.75 | $ | 3.92 | |||||||
Diluted | $ | 2.91 | $ | 2.34 | $ | 2.73 | $ | 3.89 | |||||||
Fourth Quarter | Third Quarter | Second Quarter | First Quarter | ||||||||||||
2017: | |||||||||||||||
Net sales | $ | 52,579 | $ | 45,408 | $ | 52,896 | $ | 78,351 | |||||||
Gross margin | $ | 19,931 | $ | 17,488 | $ | 20,591 | $ | 30,176 | |||||||
Net income | $ | 10,714 | $ | 8,717 | $ | 11,029 | $ | 17,891 | |||||||
Earnings per share (1): | |||||||||||||||
Basic | $ | 2.08 | $ | 1.68 | $ | 2.11 | $ | 3.38 | |||||||
Diluted | $ | 2.07 | $ | 1.67 | $ | 2.10 | $ | 3.36 | |||||||
(1) | Basic and diluted earnings per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted earnings per share. |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
(i) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; |
(ii) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and |
(iii) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. |
Item 9B. | Other Information |
Item 10. | Directors, Executive Officers and Corporate Governance |
Item 11. | Executive Compensation |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Item 13. | Certain Relationships and Related Transactions, and Director Independence |
Item 14. | Principal Accounting Fees and Services |
Item 15. | Exhibits, Financial Statement Schedules |
(a) | Documents filed as part of this report |
(1) | All financial statements |
Index to Consolidated Financial Statements | Page | |
(2) | Financial Statement Schedules |
(3) | Exhibits required by Item 601 of Regulation S-K (1) |
Incorporated by Reference | ||||||||
Exhibit Number | Exhibit Description | Form | Exhibit | Filing Date/ Period End Date | ||||
3.1 | 8-K | 3.1 | 6/6/14 | |||||
3.2 | 8-K | 3.2 | 12/15/16 | |||||
4.1 | 10-Q | 4.1 | 12/30/06 | |||||
4.2 | S-3 | 4.1 | 4/29/13 | |||||
4.3 | 8-K | 4.1 | 5/3/13 | |||||
4.4 | 8-K | 4.1 | 5/6/14 | |||||
4.5 | 8-K | 4.1 | 11/10/14 | |||||
4.6 | 8-K | 4.1 | 2/9/15 | |||||
4.7 | 8-K | 4.1 | 5/13/15 | |||||
4.8 | 8-K | 4.1 | 6/10/15 | |||||
Incorporated by Reference | ||||||||
Exhibit Number | Exhibit Description | Form | Exhibit | Filing Date/ Period End Date | ||||
4.9 | 8-K | 4.1 | 7/31/15 | |||||
4.10 | 8-K | 4.1 | 9/17/15 | |||||
4.11 | 8-K | 4.1 | 2/23/16 | |||||
4.12 | 8-K | 4.1 | 3/24/16 | |||||
4.13 | 8-K | 4.1 | 6/22/16 | |||||
4.14 | 8-K | 4.1 | 8/4/16 | |||||
4.15 | 8-K | 4.1 | 2/9/17 | |||||
4.16 | 8-K | 4.1 | 3/3/17 | |||||
4.17 | 8-K | 4.1 | 5/11/17 | |||||
4.18 | 8-K | 4.1 | 5/24/17 | |||||
4.19 | 8-K | 4.1 | 6/20/17 | |||||
4.20 | 8-K | 4.1 | 8/18/17 | |||||
4.21 | 8-K | 4.1 | 9/12/17 | |||||
4.22 | 8-K | 4.1 | 11/13/17 | |||||
4.23* | S-8 | 4.1 | 8/23/18 | |||||
10.1* | 8-K | 10.1 | 3/13/15 | |||||
10.2* | 10-Q | 10.2 | 6/27/09 | |||||
10.3* | 8-K | 10.1 | 2/14/18 | |||||
10.4* | 8-K | 10.1 | 3/1/10 | |||||
10.5* | 10-Q | 10.10 | 12/25/10 | |||||
10.6* | 10-K | 10.8 | 9/30/17 | |||||
10.7* | 10-K | 10.11 | 9/27/14 | |||||
10.8* | 10-K | 10.12 | 9/27/14 | |||||
Incorporated by Reference | ||||||||
Exhibit Number | Exhibit Description | Form | Exhibit | Filing Date/ Period End Date | ||||
10.9* | 10-K | 10.13 | 9/27/14 | |||||
10.10* | 10-Q | 10.16 | 3/26/16 | |||||
10.11* | 10-Q | 10.17 | 3/26/16 | |||||
10.12* | 10-K | 10.18 | 9/24/16 | |||||
10.13* | 10-K | 10.19 | 9/24/16 | |||||
10.14* | 10-K | 10.20 | 9/30/17 | |||||
10.15* | 10-K | 10.21 | 9/30/17 | |||||
10.16* | 10-Q | 10.2 | 3/31/18 | |||||
10.17*, ** | ||||||||
10.18*, ** | ||||||||
21.1** | ||||||||
23.1** | ||||||||
24.1** | ||||||||
31.1** | ||||||||
31.2** | ||||||||
32.1*** | ||||||||
101.INS** | XBRL Instance Document. | |||||||
101.SCH** | XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL** | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF** | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB** | XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE** | XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
* | Indicates management contract or compensatory plan or arrangement. |
** | Filed herewith. |
*** | Furnished herewith. |
(1) | Certain instruments defining the rights of holders of long-term debt securities of the Registrant are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The Registrant hereby undertakes to furnish to the SEC, upon request, copies of any such instruments. |
Item 16. | Form 10-K Summary |
Apple Inc. | |||
By: | /s/ Luca Maestri | ||
Luca Maestri | |||
Senior Vice President, Chief Financial Officer | |||
Name | Title | Date | ||
/s/ Timothy D. Cook | Chief Executive Officer and Director (Principal Executive Officer) | November 5, 2018 | ||
TIMOTHY D. COOK | ||||
/s/ Luca Maestri | Senior Vice President, Chief Financial Officer (Principal Financial Officer) | November 5, 2018 | ||
LUCA MAESTRI | ||||
/s/ Chris Kondo | Senior Director of Corporate Accounting (Principal Accounting Officer) | November 5, 2018 | ||
CHRIS KONDO | ||||
/s/ James A. Bell | Director | November 5, 2018 | ||
JAMES A. BELL | ||||
/s/ Al Gore | Director | November 5, 2018 | ||
AL GORE | ||||
/s/ Robert A. Iger | Director | November 5, 2018 | ||
ROBERT A. IGER | ||||
/s/ Andrea Jung | Director | November 5, 2018 | ||
ANDREA JUNG | ||||
/s/ Arthur D. Levinson | Director | November 5, 2018 | ||
ARTHUR D. LEVINSON | ||||
/s/ Ronald D. Sugar | Director | November 5, 2018 | ||
RONALD D. SUGAR | ||||
/s/ Susan L. Wagner | Director | November 5, 2018 | ||
SUSAN L. WAGNER | ||||
|
☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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WASHINGTON |
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91-1144442 |
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(STATE OF INCORPORATION) |
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(I.R.S. ID) |
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Large accelerated filer ☒ |
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Accelerated filer ☐ |
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Non-accelerated filer ☐ (Do not check if a smaller reporting company) |
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Smaller reporting company ☐ |
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Emerging growth company ☐ |
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Page |
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PART I |
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Item 1. |
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3 |
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15 |
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Item 1A. |
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17 |
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Item 1B. |
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29 |
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Item 2. |
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29 |
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Item 3. |
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29 |
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Item 4. |
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29 |
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PART II |
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Item 5. |
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30 |
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Item 6. |
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31 |
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Item 7. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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32 |
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Item 7A. |
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50 |
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Item 8. |
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51 |
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Item 9. |
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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98 |
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Item 9A. |
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98 |
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Report of Management on Internal Control over Financial Reporting |
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98 |
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99 |
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Item 9B. |
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100 |
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PART III |
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Item 10. |
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100 |
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Item 11. |
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100 |
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Item 12. |
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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100 |
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Item 13. |
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Certain Relationships and Related Transactions, and Director Independence |
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100 |
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Item 14. |
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100 |
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PART IV |
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Item 15. |
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101 |
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Item 16. |
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105 |
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106 |
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• |
Reinvent productivity and business processes. |
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• |
Build the intelligent cloud platform. |
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• |
Create more personal computing. |
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• |
Transforming the workplace to deliver new modern, modular business applications to improve how people communicate, collaborate, learn, work, play, and interact with one another. |
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• |
Building and running cloud-based services in ways that unleash new experiences and opportunities for businesses and individuals. |
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Applying AI to drive insights and act on our customer’s behalf by understanding and interpreting their needs using natural methods of communication. |
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Using Windows to develop new categories of devices – both our own and third-party – as a person’s experience with technology becomes more natural, personal, and predictive with multi-sensory breakthroughs in voice, ink, gaze interactions, and augmented reality holograms. |
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Inventing new gaming experiences that bring people together around their shared love for games on any devices and pushing the boundaries of innovation with console and PC gaming by creating the next wave of entertainment. |
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• |
Office Commercial, including Office 365 subscriptions and Office licensed on-premises, comprising Office, Exchange, SharePoint, Skype for Business, and Microsoft Teams, and related Client Access Licenses (“CALs”). |
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• |
Office Consumer, including Office 365 subscriptions and Office licensed on-premises, and Office Consumer Services, including Skype, Outlook.com, and OneDrive. |
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• |
LinkedIn, including Talent Solutions, Marketing Solutions, and Premium Subscriptions. |
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• |
Dynamics business solutions, including Dynamics ERP on-premises, Dynamics CRM on-premises, and Dynamics 365, a set of cloud-based applications across ERP and CRM. |
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• |
Server products and cloud services, including SQL Server, Windows Server, Visual Studio, System Center, and related CALs, and Azure. |
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Enterprise Services, including Premier Support Services and Microsoft Consulting Services. |
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Windows, including Windows OEM licensing (“Windows OEM”) and other non-volume licensing of the Windows operating system; Windows Commercial, comprising volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings; patent licensing; Windows IoT; and MSN advertising. |
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• |
Devices, including Surface, PC accessories, and other intelligent devices. |
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Gaming, including Xbox hardware and Xbox software and services, comprising Xbox Live transactions, subscriptions, and advertising (“Xbox Live”), video games, and third-party video game royalties. |
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• |
Search. |
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The mix of computing devices based on form factor and screen size. |
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Differences in device market demand between developed markets and growth markets. |
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• |
Attachment of Windows to devices shipped. |
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Customer mix between consumer, small and medium businesses, and large enterprises. |
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Changes in inventory levels in the OEM channel. |
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Pricing changes and promotions, pricing variation that occurs when the mix of devices manufactured shifts from local and regional system builders to large multinational OEMs, and different pricing of Windows versions licensed. |
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• |
Piracy. |
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Cloud and AI Platform, focuses on making IT professionals, developers, and their systems more productive and efficient through development of cloud infrastructure, server, database, CRM, ERP, management and development tools, AI cognitive services, and other business process applications and services for enterprises. |
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Experiences and Devices, focuses on instilling a unifying product ethos across our end-user experiences and devices, including Office, Windows, Enterprise Mobility and Management, and devices. |
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AI and Research, focuses on our AI innovations and other forward-looking research and development efforts spanning infrastructure, services, applications, and search. |
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LinkedIn, focuses on our services that transform the way customers hire, market, sell, and learn. |
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Gaming, focuses on connecting gaming assets across the range of devices to grow and engage the Xbox Live member network through game experiences, streaming content, and social interaction. |
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Name |
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Age |
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Position with the Company |
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||||||
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Satya Nadella |
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50 |
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Chief Executive Officer |
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Christopher C. Capossela |
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48 |
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Executive Vice President, Marketing and Consumer Business, and Chief Marketing Officer |
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Jean-Philippe Courtois |
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57 |
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Executive Vice President and President, Microsoft Global Sales, Marketing and Operations |
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Kathleen T. Hogan |
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52 |
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Executive Vice President, Human Resources |
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Amy E. Hood |
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46 |
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Executive Vice President, Chief Financial Officer |
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Margaret L. Johnson |
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56 |
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Executive Vice President, Business Development |
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Bradford L. Smith |
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59 |
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President and Chief Legal Officer |
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||||||
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• |
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission (“SEC”). |
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Information on our business strategies, financial results, and metrics for investors. |
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Announcements of investor conferences, speeches, and events at which our executives talk about our product, service, and competitive strategies. Archives of these events are also available. |
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• |
Press releases on quarterly earnings, product and service announcements, legal developments, and international news. |
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• |
Corporate governance information including our articles of incorporation, bylaws, governance guidelines, committee charters, codes of conduct and ethics, global corporate social responsibility initiatives, and other governance-related policies. |
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• |
Other news and announcements that we may post from time to time that investors might find useful or interesting. |
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• |
Opportunities to sign up for email alerts to have information pushed in real time. |
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• |
A competing vertically-integrated model, in which a single firm controls the software and hardware elements of a product and related services, has succeeded with some consumer products such as personal computers, tablets, phones, gaming consoles, and wearables. Competitors pursuing this model also earn revenue from services integrated with the hardware and software platform, including applications and content sold through their integrated marketplaces. They may also be able to claim security and performance benefits from their vertically integrated offer. We also offer some vertically-integrated hardware and software products and services. To the extent we shift a portion of our business to a vertically integrated model we increase our cost of revenue and reduce our operating margins. |
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• |
We derive substantial revenue from licenses of Windows operating systems on personal computers. We face significant competition from competing platforms developed for new devices and form factors such as smartphones and tablet computers. These devices compete on multiple bases including price and the perceived utility of the device and its platform. Users are increasingly turning to these devices to perform functions that in the past were performed by personal computers. Even if many users view these devices as complementary to a personal computer, the prevalence of these devices may make it more difficult to attract application developers to our PC operating system platforms. Competing with operating systems licensed at low or no cost may decrease our PC operating system margins. Popular products or services offered on competing platforms could increase their competitive strength. In addition, some of our devices compete with products made by our original equipment manufacturer (“OEM”) partners, which may affect their commitment to our platform. |
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• |
Competing platforms have content and application marketplaces with scale and significant installed bases. The variety and utility of content and applications available on a platform are important to device purchasing decisions. Users sometimes incur costs to move data and buy new content and applications when switching platforms. To compete, we must successfully enlist developers to write applications for our platform and ensure that these applications have high quality, security, customer appeal, and value. Efforts to compete with competitors’ content and application marketplaces may increase our cost of revenue and lower our operating margins. |
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• |
Even as we transition more of our business to infrastructure-, platform-, and software-as-a-service business model, the license-based proprietary software model generates a substantial portion of our software revenue. We bear the costs of converting original ideas into software products through investments in research and development, offsetting these costs with the revenue received from licensing our products. Many of our competitors also develop and sell software to businesses and consumers under this model. |
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• |
Other competitors develop and offer free applications, online services and content, and make money by selling third-party advertising. Advertising revenue funds development of products and services these competitors provide to users at no or little cost, competing directly with our revenue-generating products. |
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• |
Some companies compete with us using an open source business model by modifying and then distributing open source software at nominal cost to end-users, and earning revenue on advertising or complementary services and products. These firms do not bear the full costs of research and development for the software. Some open source software vendors develop software that mimics the features and functionality of our products. |
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• |
Continuing to bring to market compelling cloud-based experiences that generate increasing traffic and market share. |
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• |
Maintaining the utility, compatibility, and performance of our cloud-based services on the growing array of computing devices, including PCs, smartphones, tablets, gaming consoles, and other devices, as well as sensors and other endpoints. |
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• |
Continuing to enhance the attractiveness of our cloud platforms to third-party developers. |
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• |
Ensuring our cloud-based services meet the reliability expectations of our customers and maintain the security of their data. |
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• |
Making our suite of cloud-based services platform-agnostic, available on a wide range of devices and ecosystems, including those of our competitors. |
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• |
We may have to choose between withdrawing products from certain geographies to avoid fines or designing and developing alternative versions of those products to comply with government rulings, which may entail a delay in a product release and removing functionality that customers want or on which developers rely. |
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• |
We may be required to make available licenses to our proprietary technologies on terms that do not reflect their fair market value or do not protect our associated intellectual property. |
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• |
We are subject to a variety of ongoing commitments because of court or administrative orders, consent decrees, or other voluntary actions we have taken. If we fail to comply with these commitments, we may incur litigation costs and be subject to substantial fines or other remedial actions. |
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|
• |
Our ability to realize anticipated Windows 10 post-sale monetization opportunities may be limited. |
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• |
The introduction of new features, products, services, or terms of service that customers, users, or partners do not like. |
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• |
Public scrutiny of our decisions regarding user privacy, data practices, or content. |
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• |
Data security breaches, compliance failures, or actions of partners or individual employees. |
|
(Square feet in millions) |
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Location |
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Owned |
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Leased |
|
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Total |
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|||
|
|
|
|
|
|||||||||
|
U.S. |
|
|
18 |
|
|
|
13 |
|
|
|
31 |
|
|
International |
|
|
6 |
|
|
|
13 |
|
|
|
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
|
24 |
|
|
|
26 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
September 30 |
|
|
December 31 |
|
|
March 31 |
|
|
June 30 |
|
|
Fiscal Year |
|
|||||
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|
Fiscal Year 2018 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
|
$ |
75.97 |
|
|
$ |
87.50 |
|
|
$ |
97.24 |
|
|
$ |
102.69 |
|
|
$ |
102.69 |
|
|
Low |
|
|
68.02 |
|
|
|
73.71 |
|
|
|
83.83 |
|
|
|
87.51 |
|
|
|
68.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
|
$ |
58.70 |
|
|
$ |
64.10 |
|
|
$ |
66.19 |
|
|
$ |
72.89 |
|
|
$ |
72.89 |
|
|
Low |
|
|
50.39 |
|
|
|
56.32 |
|
|
|
61.95 |
|
|
|
64.85 |
|
|
|
50.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period |
|
Total Number Purchased |
|
|
Average Price Paid |
|
|
Total Number of |
|
|
Approximate Dollar Value of Shares that May Yet be Purchased under the Plans |
|
|||||
|
|
|
||||||||||||||||
|
|
|
||||||||||||||||
|
|
|
(in millions) |
|
||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
April 1, 2018 – April 30, 2018 |
|
|
10,320,190 |
|
|
$ |
93.11 |
|
|
|
10,320,190 |
|
|
$ |
29,339 |
|
|
|
May 1, 2018 – May 31, 2018 |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
29,339 |
|
|
|
June 1, 2018 – June 30, 2018 |
|
|
11,335,224 |
|
|
|
100.49 |
|
|
|
11,335,224 |
|
|
|
28,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,655,414 |
|
|
|
|
|
|
|
21,655,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30, |
|
|
2018 |
|
|
|
2017 |
(b)(c) |
|
|
2016 |
(b) |
|
|
2015 |
|
|
|
2014 |
(h) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
110,360 |
|
|
$ |
96,571 |
|
|
$ |
91,154 |
|
|
$ |
93,580 |
|
|
$ |
86,833 |
|
|
Gross margin |
|
|
72,007 |
|
|
|
62,310 |
|
|
|
58,374 |
|
|
|
60,542 |
|
|
|
59,755 |
|
|
Operating income |
|
|
35,058 |
|
|
|
29,025 |
(d) |
|
|
26,078 |
(e) |
|
|
18,161 |
(g) |
|
|
27,759 |
|
|
Net income |
|
|
16,571 |
(a) |
|
|
25,489 |
(d) |
|
|
20,539 |
(e) |
|
|
12,193 |
(g) |
|
|
22,074 |
|
|
Diluted earnings per share |
|
|
2.13 |
(a) |
|
|
3.25 |
(d) |
|
|
2.56 |
(e) |
|
|
1.48 |
(g) |
|
|
2.63 |
|
|
Cash dividends declared per share |
|
|
1.68 |
|
|
|
1.56 |
|
|
|
1.44 |
|
|
|
1.24 |
|
|
|
1.12 |
|
|
Cash, cash equivalents, and short-term investments |
|
|
133,768 |
|
|
|
132,981 |
|
|
|
113,240 |
|
|
|
96,526 |
|
|
|
85,709 |
|
|
Total assets |
|
|
258,848 |
|
|
|
250,312 |
|
|
|
202,897 |
(f) |
|
|
174,303 |
(f) |
|
|
170,569 |
(f) |
|
Long-term obligations |
|
|
117,642 |
|
|
|
106,856 |
|
|
|
66,705 |
(f) |
|
|
44,574 |
(f) |
|
|
35,285 |
(f) |
|
Stockholders’ equity |
|
|
82,718 |
|
|
|
87,711 |
|
|
|
83,090 |
|
|
|
80,083 |
|
|
|
89,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Includes a $13.7 billion net charge related to the Tax Cuts and Jobs Act, which decreased net income and diluted earnings per share (“EPS”) by $13.7 billion and $1.75, respectively. Refer to Note 13 – Income Taxes of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K) for further discussion. |
|
(b) |
Reflects the impact of the adoption of new accounting standards in fiscal year 2018 related to revenue recognition and leases. Refer to Note 1 – Accounting Policies of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K) for further discussion. |
|
(c) |
On December 8, 2016, we acquired LinkedIn Corporation. LinkedIn has been included in our consolidated results of operations starting on the acquisition date. |
|
(d) |
Includes $306 million of employee severance expenses primarily related to our sales and marketing restructuring plan, which decreased operating income, net income, and diluted EPS by $306 million, $243 million, and $0.04, respectively. |
|
(e) |
Includes $630 million of asset impairment charges related to our Phone business, and $480 million of restructuring charges associated with our Phone business restructuring plans, which together decreased operating income, net income, and diluted EPS by $1.1 billion, $895 million, and $0.11, respectively. |
|
(f) |
Reflects the impact of the adoption of the new accounting standard in fiscal year 2017 related to balance sheet classification of debt issuance costs. |
|
(g) |
Includes $7.5 billion of goodwill and asset impairment charges related to our Phone business, and $2.5 billion of integration and restructuring expenses, primarily associated with our Phone business restructuring plans, which together decreased operating income, net income, and diluted EPS by $10.0 billion, $9.5 billion, and $1.15, respectively. |
|
(h) |
On April 25, 2014, we acquired substantially all of Nokia Corporation’s Devices and Services business (“NDS”). NDS has been included in our consolidated results of operations starting on the acquisition date. |
|
|
• |
Commercial cloud revenue, which primarily comprises Microsoft Office 365 commercial, Microsoft Azure, Microsoft Dynamics 365, and other cloud properties, increased 56% to $23.2 billion. |
|
|
• |
Office Commercial revenue increased 11%, driven by Office 365 commercial revenue growth of 41%. |
|
|
• |
Office Consumer revenue increased 11% and Office 365 consumer subscribers increased to 31.4 million. |
|
|
• |
LinkedIn contributed revenue of $5.3 billion, driven by strong momentum across all business lines. |
|
|
• |
Dynamics revenue increased 13%, driven by Dynamics 365 revenue growth of 65%. |
|
|
• |
Server products and cloud services revenue increased 21%, driven by Azure revenue growth of 91%. |
|
|
• |
Enterprise Services revenue increased 5%. |
|
|
• |
Windows original equipment manufacturer licensing (“Windows OEM”) revenue increased 5%, driven by OEM Pro revenue growth of 11%. |
|
|
• |
Windows Commercial revenue increased 12%, driven by an increased volume of multi-year agreements. |
|
|
• |
Gaming revenue increased 14%, driven by Xbox software and services revenue growth of 20%, mainly from third-party title strength. |
|
|
• |
Microsoft Surface revenue increased 16%, driven by a higher mix of premium devices and an increase in volumes sold, due to the latest editions of Surface. |
|
|
• |
Search advertising revenue, excluding traffic acquisition costs, increased 16%, driven by higher revenue per search and search volume. |
|
(In millions, except percentages and per share amounts) |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
Percentage |
|
|
Percentage |
|
|||||
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||
|
Revenue |
|
$ |
110,360 |
|
|
$ |
96,571 |
|
|
$ |
91,154 |
|
|
|
14% |
|
|
|
6% |
|
|
Gross margin |
|
|
72,007 |
|
|
|
62,310 |
|
|
|
58,374 |
|
|
|
16% |
|
|
|
7% |
|
|
Operating income |
|
|
35,058 |
|
|
|
29,025 |
|
|
|
26,078 |
|
|
|
21% |
|
|
|
11% |
|
|
Net Income |
|
|
16,571 |
|
|
|
25,489 |
|
|
|
20,539 |
|
|
|
(35)% |
|
|
|
24% |
|
|
Diluted earnings per share |
|
|
2.13 |
|
|
|
3.25 |
|
|
|
2.56 |
|
|
|
(34)% |
|
|
|
27% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income |
|
|
35,058 |
|
|
|
29,331 |
|
|
|
27,188 |
|
|
|
20% |
|
|
|
8% |
|
|
Adjusted net income |
|
|
30,267 |
|
|
|
25,732 |
|
|
|
21,434 |
|
|
|
18% |
|
|
|
20% |
|
|
Adjusted diluted earnings per share |
|
|
3.88 |
|
|
|
3.29 |
|
|
|
2.67 |
|
|
|
18% |
|
|
|
23% |
|
|
|
|
|||||||||||||||||||
|
|
• |
Cost of revenue increased $4.1 billion or 12%, mainly due to growth in our commercial cloud, Gaming, LinkedIn, and Search advertising, offset in part by a reduction in Phone cost of revenue. |
|
|
• |
Sales and marketing expenses increased $2.0 billion or 13%, primarily due to LinkedIn expenses and investments in commercial sales capacity, offset in part by a decrease in Windows marketing expenses. |
|
|
• |
Research and development expenses increased $1.7 billion or 13%, primarily due to investments in cloud engineering and LinkedIn expenses. |
|
|
• |
General and administrative expenses increased $273 million or 6%, primarily due to LinkedIn expenses. |
|
|
• |
Cost of revenue increased $1.5 billion or 5%, mainly due to growth in our commercial cloud, the acquisition of LinkedIn, and higher Search advertising traffic acquisition costs, offset in part by a reduction in Phone sales and Gaming cost of revenue. |
|
|
• |
Research and development expenses increased $1.0 billion or 9%, primarily due to LinkedIn expenses and increased investments in cloud engineering, offset in part by a reduction in Phone expenses. |
|
|
• |
Sales and marketing expenses increased $826 million or 6%, primarily due to LinkedIn expenses and increased investments in sales capacity for our commercial cloud, offset in part by a reduction in Phone and marketing expenses. |
|
(In millions, except percentages) |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
Percentage |
|
|
Percentage |
|
|||||
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|||||||||||||||
|
Productivity and Business Processes |
|
$ |
35,865 |
|
|
$ |
29,870 |
|
|
$ |
25,792 |
|
|
|
20% |
|
|
|
16% |
|
|
Intelligent Cloud |
|
|
32,219 |
|
|
|
27,407 |
|
|
|
24,952 |
|
|
|
18% |
|
|
|
10% |
|
|
More Personal Computing |
|
|
42,276 |
|
|
|
39,294 |
|
|
|
40,410 |
|
|
|
8% |
|
|
|
(3)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
110,360 |
|
|
$ |
96,571 |
|
|
$ |
91,154 |
|
|
|
14% |
|
|
|
6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Productivity and Business Processes |
|
$ |
12,924 |
|
|
$ |
11,389 |
|
|
$ |
11,756 |
|
|
|
13% |
|
|
|
(3)% |
|
|
Intelligent Cloud |
|
|
11,524 |
|
|
|
9,127 |
|
|
|
9,249 |
|
|
|
26% |
|
|
|
(1)% |
|
|
More Personal Computing |
|
|
10,610 |
|
|
|
8,815 |
|
|
|
6,183 |
|
|
|
20% |
|
|
|
43% |
|
|
Corporate and Other |
|
|
0 |
|
|
|
(306 |
) |
|
|
(1,110 |
) |
|
|
* |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
35,058 |
|
|
$ |
29,025 |
|
|
$ |
26,078 |
|
|
|
21% |
|
|
|
11% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Not meaningful |
|
|
• |
LinkedIn revenue increased $3.0 billion to $5.3 billion. Fiscal year 2018 includes a full period of results, whereas fiscal year 2017 only includes results from the date of acquisition on December 8, 2016. LinkedIn revenue primarily consisted of revenue from Talent Solutions. |
|
|
• |
Office Commercial revenue increased $2.4 billion or 11%, driven by Office 365 commercial revenue growth, mainly due to growth in subscribers and average revenue per user, offset in part by lower revenue from products licensed on-premises, reflecting a continued shift to Office 365 commercial. |
|
|
• |
Office Consumer revenue increased $382 million or 11%, driven by Office 365 consumer revenue growth, mainly due to growth in subscribers. |
|
|
• |
Dynamics revenue increased 13%, driven by Dynamics 365 revenue growth. |
|
|
• |
Gross margin increased $4.4 billion or 19%, driven by LinkedIn and growth in Office commercial. Gross margin percentage decreased slightly, due to an increased mix of cloud offerings, offset in part by gross margin percentage improvement in Office 365 commercial and LinkedIn. LinkedIn cost of revenue increased $818 million to $1.7 billion, including $888 million of amortization for acquired intangible assets. |
|
|
• |
Operating expenses increased $2.9 billion or 25%, driven by LinkedIn expenses and investments in commercial sales capacity and cloud engineering. LinkedIn operating expenses increased $2.2 billion to $4.5 billion, including $617 million of amortization of acquired intangible assets. |
|
|
• |
Server products and cloud services revenue increased $4.5 billion or 21%, driven by Azure and server products licensed on-premises revenue growth. Azure revenue growth of 91%, due to higher infrastructure-as-a-service and platform-as-a-service consumption-based and per user-based services. Server products licensed on-premises revenue increased 5%, mainly due to a higher mix of premium licenses for Windows Server and Microsoft SQL Server. |
|
|
• |
Enterprise Services revenue increased $304 million or 5%, driven by higher revenue from Premier Support Services and Microsoft Consulting Services, offset in part by a decline in revenue from custom support agreements. |
|
|
• |
Gross margin increased $3.1 billion or 16%, driven by growth in server products and cloud services revenue and cloud services scale and efficiencies. Gross margin percentage decreased, due to an increased mix of cloud offerings, offset in part by gross margin percentage improvement in Azure. |
|
|
• |
Operating expenses increased $683 million or 7%, driven by investments in commercial sales capacity and cloud engineering. |
|
|
• |
Windows revenue increased $925 million or 5%, driven by growth in Windows Commercial and Windows OEM, offset by a decline in patent licensing revenue. Windows Commercial revenue increased 12%, driven by multi-year agreement revenue growth. Windows OEM revenue increased 5%. Windows OEM Pro revenue grew 11%, ahead of a strengthening commercial PC market. Windows OEM non-Pro revenue declined 4%, below the consumer PC market, driven by continued pressure in the entry-level price category. |
|
|
• |
Gaming revenue increased $1.3 billion or 14%, driven by Xbox software and services revenue growth of 20%, mainly from third-party title strength. |
|
|
• |
Search advertising revenue increased $793 million or 13%. Search advertising revenue, excluding traffic acquisition costs, increased 16%, driven by growth in Bing, due to higher revenue per search and search volume. |
|
|
• |
Surface revenue increased $625 million or 16%, driven by a higher mix of premium devices and an increase in volumes sold, due to the latest editions of Surface. |
|
|
• |
Phone revenue decreased $525 million. |
|
|
• |
Gross margin increased $2.2 billion or 11%, driven by growth in Windows, Surface, Search, and Gaming. Gross margin percentage increased, primarily due to gross margin percentage improvement in Surface. |
|
|
• |
LinkedIn revenue was $2.3 billion, primarily comprised of revenue from Talent Solutions. |
|
|
• |
Office Commercial revenue increased $1.4 billion or 7%, driven by higher revenue from Office 365 commercial, mainly due to growth in subscribers, offset in part by lower revenue from products licensed on-premises, reflecting a continued shift to Office 365 commercial. |
|
|
• |
Office Consumer revenue increased $351 million or 11%, driven by higher revenue from Office 365 consumer, mainly due to growth in subscribers. |
|
|
• |
Dynamics revenue increased 5%, primarily due to higher revenue from Dynamics 365. |
|
|
• |
Operating expenses increased $2.3 billion or 26%, mainly due to LinkedIn and cloud engineering expenses. Operating expenses included $2.3 billion related to our acquisition of LinkedIn, including $359 million of amortization of acquired intangible assets. Sales and marketing expenses increased $1.2 billion or 24%, research and development expenses increased $955 million or 35%, and general and administrative expenses increased $212 million or 14%. |
|
|
• |
Gross margin increased $2.0 billion or 9%, primarily due to our acquisition of LinkedIn. Gross margin percentage decreased, due to an increased mix of cloud offerings and amortization of acquired intangible assets related to LinkedIn. Cost of revenue included $918 million related to our acquisition of LinkedIn, including $507 million of amortization of acquired intangible assets. |
|
|
• |
Server products and cloud services revenue grew $2.6 billion or 14%, driven by Azure revenue growth of 98% and server products licensed on-premises revenue growth of 5%. |
|
|
• |
Enterprise Services revenue decreased 2%, driven by a decline in revenue from custom support agreements, offset in part by higher revenue from Premier Support Services and Microsoft Consulting Services. |
|
|
• |
Operating expenses increased $975 million or 11%, driven by investments in sales capacity, cloud engineering, and developer engagement. Sales and marketing expenses increased $549 million or 13%, research and development expenses increased $468 million or 14%, and general and administrative expenses decreased $42 million or 3%. |
|
|
• |
Gross margin increased $853 million or 5%, driven by growth in server products and cloud services revenue and cloud services scale and efficiencies, offset in part by a decline in Enterprise Services gross margin. Gross margin percentage decreased, due to an increased mix of cloud offerings and lower Enterprise Services gross margin percent, offset by improvement in Azure gross margin percent. |
|
|
• |
Windows revenue increased $1.0 billion or 6%, mainly due to higher revenue from Windows Commercial and Windows OEM. Windows Commercial revenue grew 14%, driven by multi-year agreement revenue. Windows OEM revenue increased 3%. Windows OEM Pro revenue grew 4%, outperforming the commercial PC market, primarily due to a higher mix of premium licenses sold. Windows OEM non-Pro revenue grew 3%, outperforming the consumer PC market, primarily due to a higher mix of premium devices sold. |
|
|
• |
Search advertising revenue increased $791 million or 15%. Search advertising revenue, excluding traffic acquisition costs, increased 9%, primarily driven by growth in Bing, due to higher revenue per search and search volume. |
|
|
• |
Gaming revenue decreased slightly, primarily due to lower Xbox hardware revenue, offset in part by higher revenue from Xbox software and services. Xbox hardware revenue decreased 21%, mainly due to lower prices of consoles sold and a decline in volume of consoles sold. Xbox software and services revenue increased 11%, driven by a higher volume of Xbox Live transactions and revenue per transaction. |
|
|
• |
Surface revenue decreased $82 million or 2%, primarily due to a reduction in volumes sold, offset in part by a higher mix of premium devices. |
|
|
• |
Phone revenue decreased $2.8 billion. |
|
|
• |
Gross margin increased $1.1 billion or 6%, driven by growth in Windows, Search advertising, and Gaming, offset in part by a decline in Phone and Surface. Gross margin percentage increased, due to favorable sales mix and gross margin percent improvements across Windows, Gaming, and Search advertising, offset by a gross margin percent decline in Devices. |
|
(In millions, except percentages) |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
Percentage |
|
|
Percentage |
|
|||||
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Research and development |
|
$ |
14,726 |
|
|
$ |
13,037 |
|
|
$ |
11,988 |
|
|
|
13% |
|
|
|
9% |
|
|
As a percent of revenue |
|
|
13% |
|
|
|
13% |
|
|
|
13% |
|
|
|
0ppt |
|
|
|
0ppt |
|
|
|
|
|||||||||||||||||||
|
(In millions, except percentages) |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
Percentage |
|
|
Percentage |
|
|||||
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Sales and marketing |
|
$ |
17,469 |
|
|
$ |
15,461 |
|
|
$ |
14,635 |
|
|
|
13% |
|
|
|
6% |
|
|
As a percent of revenue |
|
|
16% |
|
|
|
16% |
|
|
|
16% |
|
|
|
0ppt |
|
|
|
0ppt |
|
|
|
|
|||||||||||||||||||
|
(In millions, except percentages) |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
Percentage |
|
|
Percentage |
|
|||||
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
General and administrative |
|
$ |
4,754 |
|
|
$ |
4,481 |
|
|
$ |
4,563 |
|
|
|
6% |
|
|
|
(2)% |
|
|
As a percent of revenue |
|
|
4% |
|
|
|
5% |
|
|
|
5% |
|
|
|
(1)ppt |
|
|
|
0ppt |
|
|
|
|
|||||||||||||||||||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|||||||||
|
Dividends and interest income |
|
$ |
2,214 |
|
|
$ |
1,387 |
|
|
$ |
903 |
|
|
Interest expense |
|
|
(2,733 |
) |
|
|
(2,222 |
) |
|
|
(1,243 |
) |
|
Net recognized gains on investments |
|
|
2,399 |
|
|
|
2,583 |
|
|
|
668 |
|
|
Net losses on derivatives |
|
|
(187 |
) |
|
|
(510 |
) |
|
|
(443 |
) |
|
Net losses on foreign currency remeasurements |
|
|
(218 |
) |
|
|
(111 |
) |
|
|
(129 |
) |
|
Other, net |
|
|
(59 |
) |
|
|
(251 |
) |
|
|
(195 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
1,416 |
|
|
$ |
876 |
|
|
$ |
(439 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except percentages and per share amounts) |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|
Percentage |
|
|
Percentage |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
35,058 |
|
|
$ |
29,025 |
|
|
$ |
26,078 |
|
|
|
21% |
|
|
|
11% |
|
|
Net charge related to the TCJA |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
Impairment and restructuring expenses |
|
|
0 |
|
|
|
306 |
|
|
|
1,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income |
|
$ |
35,058 |
|
|
$ |
29,331 |
|
|
$ |
27,188 |
|
|
|
20% |
|
|
|
8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
16,571 |
|
|
$ |
25,489 |
|
|
$ |
20,539 |
|
|
|
(35)% |
|
|
|
24% |
|
|
Net charge related to the TCJA |
|
|
13,696 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
Impairment and restructuring expenses |
|
|
0 |
|
|
|
243 |
|
|
|
895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income |
|
$ |
30,267 |
|
|
$ |
25,732 |
|
|
$ |
21,434 |
|
|
|
18% |
|
|
|
20% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
2.13 |
|
|
$ |
3.25 |
|
|
$ |
2.56 |
|
|
|
(34)% |
|
|
|
27% |
|
|
Net charge related to the TCJA |
|
|
1.75 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
Impairment and restructuring expenses |
|
|
0 |
|
|
|
0.04 |
|
|
|
0.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share |
|
$ |
3.88 |
|
|
$ |
3.29 |
|
|
$ |
2.67 |
|
|
|
18% |
|
|
|
23% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|||
|
|
|
|
||
|
Three Months Ending, |
|
|
|
|
|
|
|
|||
|
September 30, 2018 |
|
$ |
11,081 |
|
|
December 31, 2018 |
|
|
8,688 |
|
|
March 31, 2019 |
|
|
5,995 |
|
|
June 30, 2019 |
|
|
3,141 |
|
|
Thereafter |
|
|
3,815 |
|
|
|
|
|||
|
|
|
|||
|
Total |
|
$ |
32,720 |
|
|
|
|
|
|
|
|
(In millions) |
|
2019 |
|
|
2020-2021 |
|
|
2022-2023 |
|
|
Thereafter |
|
|
Total |
|
|||||
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||
|
Long-term debt: (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal payments |
|
$ |
4,000 |
|
|
$ |
9,268 |
|
|
$ |
10,794 |
|
|
$ |
52,836 |
|
|
$ |
76,898 |
|
|
Interest payments |
|
|
2,377 |
|
|
|
4,495 |
|
|
|
4,066 |
|
|
|
31,247 |
|
|
|
42,185 |
|
|
Construction commitments (b) |
|
|
1,793 |
|
|
|
107 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,900 |
|
|
Operating leases, including imputed interest (c) |
|
|
1,538 |
|
|
|
2,567 |
|
|
|
1,778 |
|
|
|
2,416 |
|
|
|
8,299 |
|
|
|
|
470 |
|
|
|
1,101 |
|
|
|
1,142 |
|
|
|
5,751 |
|
|
|
8,464 |
|
|
|
Transition tax (d) |
|
|
1,495 |
|
|
|
2,808 |
|
|
|
2,808 |
|
|
|
10,530 |
|
|
|
17,641 |
|
|
Purchase commitments (e) |
|
|
19,321 |
|
|
|
874 |
|
|
|
255 |
|
|
|
408 |
|
|
|
20,858 |
|
|
Other long-term liabilities (f) |
|
|
0 |
|
|
|
76 |
|
|
|
19 |
|
|
|
313 |
|
|
|
408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total contractual obligations |
|
$ |
30,994 |
|
|
$ |
21,296 |
|
|
$ |
20,862 |
|
|
$ |
103,501 |
|
|
$ |
176,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Refer to Note 12 – Debt of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K). |
|
(b) |
Refer to Note 8 – Property and Equipment of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K). |
|
(c) |
Refer to Note 16 – Leases of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K). |
|
(d) |
Refer to Note 13 – Income Taxes of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K). |
|
(e) |
Amounts represent purchase commitments, including open purchase orders and take-or-pay contracts that are not presented as construction commitments above. |
|
(f) |
We have excluded long-term tax contingencies, other tax liabilities, and deferred income taxes of $13.6 billion from the amounts presented as the timing of these obligations is uncertain. We have also excluded unearned revenue and non-cash items. |
|
Satya Nadella |
|
Chief Executive Officer |
|
|
|
Amy E. Hood |
|
Executive Vice President and Chief Financial Officer |
|
|
|
Frank H. Brod |
|
Corporate Vice President, Finance and Administration; |
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Risk Categories |
|
Hypothetical Change |
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
Impact |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency - Revenue |
|
10% decrease in foreign exchange rates |
|
$ |
(2,187 |
) |
|
$ |
(1,785 |
) |
|
Earnings |
|
|
Foreign currency - Investments |
|
10% decrease in foreign exchange rates |
|
|
(70 |
) |
|
|
(92 |
) |
|
Fair Value |
|
|
Interest rate |
|
100 basis point increase in U.S. treasury interest rates |
|
|
(2,705 |
) |
|
|
(2,394 |
) |
|
Fair Value |
|
|
Credit |
|
100 basis point increase in credit spreads |
|
|
(232 |
) |
|
|
(167 |
) |
|
Fair Value |
|
|
Equity |
|
10% decrease in equity market prices |
|
|
(140 |
) |
|
|
(323 |
) |
|
Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
64,497 |
|
|
$ |
63,811 |
|
|
$ |
67,336 |
|
|
Service and other |
|
|
45,863 |
|
|
|
32,760 |
|
|
|
23,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total revenue |
|
|
110,360 |
|
|
|
96,571 |
|
|
|
91,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
|
15,420 |
|
|
|
15,175 |
|
|
|
17,880 |
|
|
Service and other |
|
|
22,933 |
|
|
|
19,086 |
|
|
|
14,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total cost of revenue |
|
|
38,353 |
|
|
|
34,261 |
|
|
|
32,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Gross margin |
|
|
72,007 |
|
|
|
62,310 |
|
|
|
58,374 |
|
|
Research and development |
|
|
14,726 |
|
|
|
13,037 |
|
|
|
11,988 |
|
|
Sales and marketing |
|
|
17,469 |
|
|
|
15,461 |
|
|
|
14,635 |
|
|
General and administrative |
|
|
4,754 |
|
|
|
4,481 |
|
|
|
4,563 |
|
|
Impairment and restructuring |
|
|
0 |
|
|
|
306 |
|
|
|
1,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Operating income |
|
|
35,058 |
|
|
|
29,025 |
|
|
|
26,078 |
|
|
Other income (expense), net |
|
|
1,416 |
|
|
|
876 |
|
|
|
(439 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Income before income taxes |
|
|
36,474 |
|
|
|
29,901 |
|
|
|
25,639 |
|
|
Provision for income taxes |
|
|
19,903 |
|
|
|
4,412 |
|
|
|
5,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Net income |
|
$ |
16,571 |
|
|
$ |
25,489 |
|
|
$ |
20,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
2.15 |
|
|
$ |
3.29 |
|
|
$ |
2.59 |
|
|
Diluted |
|
$ |
2.13 |
|
|
$ |
3.25 |
|
|
$ |
2.56 |
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|||||||||
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
7,700 |
|
|
|
7,746 |
|
|
|
7,925 |
|
|
Diluted |
|
|
7,794 |
|
|
|
7,832 |
|
|
|
8,013 |
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|||||||||
|
Cash dividends declared per common share |
|
$ |
1.68 |
|
|
$ |
1.56 |
|
|
$ |
1.44 |
|
|
|
|
|||||||||||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Net income |
|
$ |
16,571 |
|
|
$ |
25,489 |
|
|
$ |
20,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change related to derivatives |
|
|
39 |
|
|
|
(218 |
) |
|
|
(238 |
) |
|
Net change related to investments |
|
|
(2,717 |
) |
|
|
(1,116 |
) |
|
|
(228 |
) |
|
Translation adjustments and other |
|
|
(178 |
) |
|
|
167 |
|
|
|
(262 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
|
(2,856 |
) |
|
|
(1,167 |
) |
|
|
(728 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
13,715 |
|
|
$ |
24,322 |
|
|
$ |
19,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
||
|
|
|
|||||||
|
|
|
|
|
|||||
|
June 30, |
|
2018 |
|
|
2017 |
|
||
|
|
|
|
||||||
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
11,946 |
|
|
$ |
7,663 |
|
|
Short-term investments |
|
|
121,822 |
|
|
|
125,318 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Total cash, cash equivalents, and short-term investments |
|
|
133,768 |
|
|
|
132,981 |
|
|
Accounts receivable, net of allowance for doubtful accounts of $377 and $345 |
|
|
26,481 |
|
|
|
22,431 |
|
|
Inventories |
|
|
2,662 |
|
|
|
2,181 |
|
|
Other |
|
|
6,751 |
|
|
|
5,103 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total current assets |
|
|
169,662 |
|
|
|
162,696 |
|
|
Property and equipment, net of accumulated depreciation of $29,223 and $24,179 |
|
|
29,460 |
|
|
|
23,734 |
|
|
Operating lease right-of-use assets |
|
|
6,686 |
|
|
|
6,555 |
|
|
Equity and other investments |
|
|
1,862 |
|
|
|
6,023 |
|
|
Goodwill |
|
|
35,683 |
|
|
|
35,122 |
|
|
Intangible assets, net |
|
|
8,053 |
|
|
|
10,106 |
|
|
Other long-term assets |
|
|
7,442 |
|
|
|
6,076 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total assets |
|
$ |
258,848 |
|
|
$ |
250,312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
8,617 |
|
|
$ |
7,390 |
|
|
Short-term debt |
|
|
0 |
|
|
|
9,072 |
|
|
Current portion of long-term debt |
|
|
3,998 |
|
|
|
1,049 |
|
|
Accrued compensation |
|
|
6,103 |
|
|
|
5,819 |
|
|
Short-term income taxes |
|
|
2,121 |
|
|
|
718 |
|
|
Short-term unearned revenue |
|
|
28,905 |
|
|
|
24,013 |
|
|
Other |
|
|
8,744 |
|
|
|
7,684 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total current liabilities |
|
|
58,488 |
|
|
|
55,745 |
|
|
Long-term debt |
|
|
72,242 |
|
|
|
76,073 |
|
|
Long-term income taxes |
|
|
30,265 |
|
|
|
13,485 |
|
|
Long-term unearned revenue |
|
|
3,815 |
|
|
|
2,643 |
|
|
Deferred income taxes |
|
|
541 |
|
|
|
5,734 |
|
|
Operating lease liabilities |
|
|
5,568 |
|
|
|
5,372 |
|
|
Other long-term liabilities |
|
|
5,211 |
|
|
|
3,549 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total liabilities |
|
|
176,130 |
|
|
|
162,601 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
Common stock and paid-in capital – shares authorized 24,000; outstanding 7,677 and 7,708 |
|
|
71,223 |
|
|
|
69,315 |
|
|
Retained earnings |
|
|
13,682 |
|
|
|
17,769 |
|
|
Accumulated other comprehensive income (loss) |
|
|
(2,187 |
) |
|
|
627 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total stockholders’ equity |
|
|
82,718 |
|
|
|
87,711 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total liabilities and stockholders’ equity |
|
$ |
258,848 |
|
|
$ |
250,312 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
16,571 |
|
|
$ |
25,489 |
|
|
$ |
20,539 |
|
|
Adjustments to reconcile net income to net cash from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairments |
|
|
0 |
|
|
|
0 |
|
|
|
630 |
|
|
Depreciation, amortization, and other |
|
|
10,261 |
|
|
|
8,778 |
|
|
|
6,622 |
|
|
Stock-based compensation expense |
|
|
3,940 |
|
|
|
3,266 |
|
|
|
2,668 |
|
|
Net recognized gains on investments and derivatives |
|
|
(2,212 |
) |
|
|
(2,073 |
) |
|
|
(223 |
) |
|
Deferred income taxes |
|
|
(5,143 |
) |
|
|
(829 |
) |
|
|
2,479 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(3,862 |
) |
|
|
(1,216 |
) |
|
|
562 |
|
|
Inventories |
|
|
(465 |
) |
|
|
50 |
|
|
|
600 |
|
|
Other current assets |
|
|
(952 |
) |
|
|
1,028 |
|
|
|
(1,212 |
) |
|
Other long-term assets |
|
|
(285 |
) |
|
|
(917 |
) |
|
|
(1,110 |
) |
|
Accounts payable |
|
|
1,148 |
|
|
|
81 |
|
|
|
88 |
|
|
Unearned revenue |
|
|
5,922 |
|
|
|
3,820 |
|
|
|
2,565 |
|
|
Income taxes |
|
|
18,183 |
|
|
|
1,792 |
|
|
|
(298 |
) |
|
Other current liabilities |
|
|
798 |
|
|
|
356 |
|
|
|
(179 |
) |
|
Other long-term liabilities |
|
|
(20 |
) |
|
|
(118 |
) |
|
|
(406 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from operations |
|
|
43,884 |
|
|
|
39,507 |
|
|
|
33,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance (repayments) of short-term debt, maturities of 90 days or less, net |
|
|
(7,324 |
) |
|
|
(4,963 |
) |
|
|
7,195 |
|
|
Proceeds from issuance of debt |
|
|
7,183 |
|
|
|
44,344 |
|
|
|
13,884 |
|
|
Repayments of debt |
|
|
(10,060 |
) |
|
|
(7,922 |
) |
|
|
(2,796 |
) |
|
Common stock issued |
|
|
1,002 |
|
|
|
772 |
|
|
|
668 |
|
|
Common stock repurchased |
|
|
(10,721 |
) |
|
|
(11,788 |
) |
|
|
(15,969 |
) |
|
Common stock cash dividends paid |
|
|
(12,699 |
) |
|
|
(11,845 |
) |
|
|
(11,006 |
) |
|
Other, net |
|
|
(971 |
) |
|
|
(190 |
) |
|
|
(369 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from (used in) financing |
|
|
(33,590 |
) |
|
|
8,408 |
|
|
|
(8,393 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing |
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property and equipment |
|
|
(11,632 |
) |
|
|
(8,129 |
) |
|
|
(8,343 |
) |
|
Acquisition of companies, net of cash acquired, and purchases of intangible and other assets |
|
|
(888 |
) |
|
|
(25,944 |
) |
|
|
(1,393 |
) |
|
Purchases of investments |
|
|
(137,380 |
) |
|
|
(176,905 |
) |
|
|
(129,758 |
) |
|
Maturities of investments |
|
|
26,360 |
|
|
|
28,044 |
|
|
|
22,054 |
|
|
Sales of investments |
|
|
117,577 |
|
|
|
136,350 |
|
|
|
93,287 |
|
|
Securities lending payable |
|
|
(98 |
) |
|
|
(197 |
) |
|
|
203 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing |
|
|
(6,061 |
) |
|
|
(46,781 |
) |
|
|
(23,950 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rates on cash and cash equivalents |
|
|
50 |
|
|
|
19 |
|
|
|
(67 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
|
4,283 |
|
|
|
1,153 |
|
|
|
915 |
|
|
Cash and cash equivalents, beginning of period |
|
|
7,663 |
|
|
|
6,510 |
|
|
|
5,595 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
11,946 |
|
|
$ |
7,663 |
|
|
$ |
6,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|||||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Common stock and paid-in capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
$ |
69,315 |
|
|
$ |
68,178 |
|
|
$ |
68,465 |
|
|
Common stock issued |
|
|
1,002 |
|
|
|
772 |
|
|
|
668 |
|
|
Common stock repurchased |
|
|
(3,033 |
) |
|
|
(2,987 |
) |
|
|
(3,689 |
) |
|
Stock-based compensation expense |
|
|
3,940 |
|
|
|
3,266 |
|
|
|
2,668 |
|
|
Other, net |
|
|
(1 |
) |
|
|
86 |
|
|
|
66 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance, end of period |
|
|
71,223 |
|
|
|
69,315 |
|
|
|
68,178 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Retained earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
17,769 |
|
|
|
13,118 |
|
|
|
16,191 |
|
|
Net income |
|
|
16,571 |
|
|
|
25,489 |
|
|
|
20,539 |
|
|
Common stock cash dividends |
|
|
(12,917 |
) |
|
|
(12,040 |
) |
|
|
(11,329 |
) |
|
Common stock repurchased |
|
|
(7,699 |
) |
|
|
(8,798 |
) |
|
|
(12,283 |
) |
|
Cumulative effect of accounting change |
|
|
(42 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance, end of period |
|
|
13,682 |
|
|
|
17,769 |
|
|
|
13,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Accumulated other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
627 |
|
|
|
1,794 |
|
|
|
2,522 |
|
|
Other comprehensive loss |
|
|
(2,856 |
) |
|
|
(1,167 |
) |
|
|
(728 |
) |
|
Cumulative effect of accounting change |
|
|
42 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance, end of period |
|
|
(2,187 |
) |
|
|
627 |
|
|
|
1,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total stockholders’ equity |
|
$ |
82,718 |
|
|
$ |
87,711 |
|
|
$ |
83,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|||||||||||||
|
|
|
|
||||||||||||
|
|
|
|
||||||||||||
|
Year Ended June 30, |
|
|
2018 |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Balance, beginning of period |
|
$ |
361 |
|
|
|
$ |
409 |
|
|
$ |
289 |
|
|
|
Charged to costs and other |
|
|
134 |
|
|
|
|
58 |
|
|
|
175 |
|
|
|
Write-offs |
|
|
(98 |
) |
|
|
|
(106 |
) |
|
|
(55 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period |
|
$ |
397 |
|
|
|
$ |
361 |
|
|
$ |
409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
||||||||||||
|
June 30, |
|
|
2018 |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Accounts receivable, net of allowance for doubtful accounts |
|
$ |
377 |
|
|
|
$ |
345 |
|
|
$ |
392 |
|
|
|
Other long-term assets |
|
|
20 |
|
|
|
|
16 |
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
397 |
|
|
|
$ |
361 |
|
|
$ |
409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• |
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets. Our Level 1 non-derivative investments primarily include U.S. government securities, common and preferred stock, and mutual funds. Our Level 1 derivative assets and liabilities include those actively traded on exchanges. |
|
|
• |
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit spreads, foreign exchange rates, and forward and spot prices for currencies. Our Level 2 non-derivative investments consist primarily of corporate notes and bonds, foreign government bonds, mortgage- and asset-backed securities, commercial paper, certificates of deposit, and U.S. agency securities. Our Level 2 derivative assets and liabilities primarily include certain over-the-counter option and swap contracts. |
|
|
• |
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Our Level 3 non-derivative assets and liabilities primarily comprise investments in common and preferred stock, and goodwill and intangible assets, when they are recorded at fair value due to an impairment charge. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities. |
|
(In millions) |
|
As Previously Reported |
|
|
As Adjusted |
|
||
|
|
|
|||||||
|
|
|
|||||||
|
Balance Sheets |
|
|
|
|
|
|
June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term income taxes |
|
$ |
0 |
|
|
$ |
13,485 |
|
|
Other long-term liabilities |
|
|
17,034 |
|
|
|
3,549 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share amounts) |
|
As Previously Reported |
|
|
New Revenue Standard Adjustment |
|
|
As Restated |
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Statements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Year Ended June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
89,950 |
|
|
$ |
6,621 |
|
|
$ |
96,571 |
|
|
Provision for income taxes |
|
|
1,945 |
|
|
|
2,467 |
|
|
|
4,412 |
|
|
Net income |
|
|
21,204 |
|
|
|
4,285 |
|
|
|
25,489 |
|
|
Diluted earnings per share |
|
|
2.71 |
|
|
|
0.54 |
|
|
|
3.25 |
|
|
|
|
|||||||||||
|
Year Ended June 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
85,320 |
|
|
$ |
5,834 |
|
|
$ |
91,154 |
|
|
Provision for income taxes |
|
|
2,953 |
|
|
|
2,147 |
|
|
|
5,100 |
|
|
Net income |
|
|
16,798 |
|
|
|
3,741 |
|
|
|
20,539 |
|
|
Diluted earnings per share |
|
|
2.10 |
|
|
|
0.46 |
|
|
|
2.56 |
|
|
|
|
|||||||||||
|
(In millions) |
|
As Previously Reported |
|
|
New Revenue Standard Adjustment |
|
|
New Lease Standard Adjustment |
|
|
As Restated |
|
||||
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net of allowance for doubtful accounts |
|
$ |
19,792 |
|
|
$ |
2,639 |
|
|
$ |
0 |
|
|
$ |
22,431 |
|
|
Operating lease right-of-use assets |
|
|
0 |
|
|
|
0 |
|
|
|
6,555 |
|
|
|
6,555 |
|
|
Other current and long-term assets |
|
|
11,147 |
|
|
|
32 |
|
|
|
0 |
|
|
|
11,179 |
|
|
Unearned revenue |
|
|
44,479 |
|
|
|
(17,823 |
) |
|
|
0 |
|
|
|
26,656 |
|
|
Deferred income taxes |
|
|
531 |
|
|
|
5,203 |
|
|
|
0 |
|
|
|
5,734 |
|
|
Operating lease liabilities |
|
|
0 |
|
|
|
0 |
|
|
|
5,372 |
|
|
|
5,372 |
|
|
Other current and long-term liabilities |
|
|
23,464 |
|
|
|
(26 |
) |
|
|
1,183 |
|
|
|
24,621 |
|
|
Stockholders' equity |
|
|
72,394 |
|
|
|
15,317 |
|
|
|
0 |
|
|
|
87,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except earnings per share) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available for common shareholders (A) |
|
$ |
16,571 |
|
|
$ |
25,489 |
|
|
$ |
20,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average outstanding shares of common stock (B) |
|
|
7,700 |
|
|
|
7,746 |
|
|
|
7,925 |
|
|
Dilutive effect of stock-based awards |
|
|
94 |
|
|
|
86 |
|
|
|
88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and common stock equivalents (C) |
|
|
7,794 |
|
|
|
7,832 |
|
|
|
8,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (A/B) |
|
$ |
2.15 |
|
|
$ |
3.29 |
|
|
$ |
2.59 |
|
|
Diluted (A/C) |
|
$ |
2.13 |
|
|
$ |
3.25 |
|
|
$ |
2.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|||||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Dividends and interest income |
|
$ |
2,214 |
|
|
$ |
1,387 |
|
|
$ |
903 |
|
|
Interest expense |
|
|
(2,733 |
) |
|
|
(2,222 |
) |
|
|
(1,243 |
) |
|
Net recognized gains on investments |
|
|
2,399 |
|
|
|
2,583 |
|
|
|
668 |
|
|
Net losses on derivatives |
|
|
(187 |
) |
|
|
(510 |
) |
|
|
(443 |
) |
|
Net losses on foreign currency remeasurements |
|
|
(218 |
) |
|
|
(111 |
) |
|
|
(129 |
) |
|
Other, net |
|
|
(59 |
) |
|
|
(251 |
) |
|
|
(195 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
1,416 |
|
|
$ |
876 |
|
|
$ |
(439 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Other-than-temporary impairments of investments |
|
$ |
(47 |
) |
|
$ |
(55 |
) |
|
$ |
(322 |
) |
|
Realized gains from sales of available-for-sale securities |
|
|
3,478 |
|
|
|
3,064 |
|
|
|
1,376 |
|
|
Realized losses from sales of available-for-sale securities |
|
|
(1,032 |
) |
|
|
(426 |
) |
|
|
(386 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
2,399 |
|
|
$ |
2,583 |
|
|
$ |
668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
Cost Basis |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Recorded Basis |
|
|
Cash and Cash Equivalents |
|
|
Short-term Investments |
|
|
Equity and Other Investments |
|
|||||||
|
|
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Cash |
|
$ |
3,942 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
3,942 |
|
|
$ |
3,942 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
Mutual funds |
|
|
246 |
|
|
|
0 |
|
|
|
0 |
|
|
|
246 |
|
|
|
246 |
|
|
|
0 |
|
|
|
0 |
|
|
Commercial paper |
|
|
2,513 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,513 |
|
|
|
2,215 |
|
|
|
298 |
|
|
|
0 |
|
|
Certificates of deposit |
|
|
2,058 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,058 |
|
|
|
1,865 |
|
|
|
193 |
|
|
|
0 |
|
|
U.S. government and agency securities |
|
|
109,862 |
|
|
|
62 |
|
|
|
(1,167 |
) |
|
|
108,757 |
|
|
|
3,678 |
|
|
|
105,079 |
|
|
|
0 |
|
|
Foreign government bonds |
|
|
5,182 |
|
|
|
1 |
|
|
|
(10 |
) |
|
|
5,173 |
|
|
|
0 |
|
|
|
5,173 |
|
|
|
0 |
|
|
Mortgage- and asset-backed securities |
|
|
3,868 |
|
|
|
4 |
|
|
|
(13 |
) |
|
|
3,859 |
|
|
|
0 |
|
|
|
3,859 |
|
|
|
0 |
|
|
Corporate notes and bonds |
|
|
6,947 |
|
|
|
21 |
|
|
|
(56 |
) |
|
|
6,912 |
|
|
|
0 |
|
|
|
6,912 |
|
|
|
0 |
|
|
Municipal securities |
|
|
271 |
|
|
|
37 |
|
|
|
(1 |
) |
|
|
307 |
|
|
|
0 |
|
|
|
307 |
|
|
|
0 |
|
|
Common and preferred stock |
|
|
1,220 |
|
|
|
95 |
|
|
|
(10 |
) |
|
|
1,305 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,305 |
|
|
Other investments |
|
|
558 |
|
|
|
0 |
|
|
|
0 |
|
|
|
558 |
|
|
|
0 |
|
|
|
1 |
|
|
|
557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
136,667 |
|
|
$ |
220 |
|
|
$ |
(1,257 |
) |
|
$ |
135,630 |
|
|
$ |
11,946 |
|
|
$ |
121,822 |
|
|
$ |
1,862 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
Cost Basis |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Recorded Basis |
|
|
Cash and Cash Equivalents |
|
|
Short-term Investments |
|
|
Equity and Other Investments |
|
|||||||
|
|
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Cash |
|
$ |
3,624 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
3,624 |
|
|
$ |
3,624 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
Mutual funds |
|
|
1,478 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,478 |
|
|
|
1,478 |
|
|
|
0 |
|
|
|
0 |
|
|
Commercial paper |
|
|
319 |
|
|
|
0 |
|
|
|
0 |
|
|
|
319 |
|
|
|
69 |
|
|
|
250 |
|
|
|
0 |
|
|
Certificates of deposit |
|
|
1,358 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,358 |
|
|
|
972 |
|
|
|
386 |
|
|
|
0 |
|
|
U.S. government and agency securities |
|
|
112,119 |
|
|
|
85 |
|
|
|
(360 |
) |
|
|
111,844 |
|
|
|
16 |
|
|
|
111,828 |
|
|
|
0 |
|
|
Foreign government bonds |
|
|
5,276 |
|
|
|
2 |
|
|
|
(13 |
) |
|
|
5,265 |
|
|
|
1,504 |
|
|
|
3,761 |
|
|
|
0 |
|
|
Mortgage- and asset-backed securities |
|
|
3,921 |
|
|
|
14 |
|
|
|
(4 |
) |
|
|
3,931 |
|
|
|
0 |
|
|
|
3,931 |
|
|
|
0 |
|
|
Corporate notes and bonds |
|
|
4,786 |
|
|
|
61 |
|
|
|
(12 |
) |
|
|
4,835 |
|
|
|
0 |
|
|
|
4,835 |
|
|
|
0 |
|
|
Municipal securities |
|
|
284 |
|
|
|
43 |
|
|
|
0 |
|
|
|
327 |
|
|
|
0 |
|
|
|
327 |
|
|
|
0 |
|
|
Common and preferred stock |
|
|
2,472 |
|
|
|
3,062 |
|
|
|
(34 |
) |
|
|
5,500 |
|
|
|
0 |
|
|
|
0 |
|
|
|
5,500 |
|
|
Other investments |
|
|
523 |
|
|
|
0 |
|
|
|
0 |
|
|
|
523 |
|
|
|
0 |
|
|
|
0 |
|
|
|
523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
136,160 |
|
|
$ |
3,267 |
|
|
$ |
(423 |
) |
|
$ |
139,004 |
|
|
$ |
7,663 |
|
|
$ |
125,318 |
|
|
$ |
6,023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 Months |
|
|
12 Months or Greater |
|
|
|
|
|
Total |
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
(In millions) |
|
Fair Value |
|
|
Unrealized |
|
|
Fair Value |
|
|
Unrealized |
|
|
Total |
|
|
||||||||
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
U.S. government and agency securities |
|
$ |
82,352 |
|
|
$ |
(1,064 |
) |
|
$ |
4,459 |
|
|
$ |
(103 |
) |
|
$ |
86,811 |
|
|
$ |
(1,167 |
) |
|
Foreign government bonds |
|
|
3,457 |
|
|
|
(7 |
) |
|
|
13 |
|
|
|
(3 |
) |
|
|
3,470 |
|
|
|
(10 |
) |
|
Mortgage- and asset-backed securities |
|
|
2,072 |
|
|
|
(9 |
) |
|
|
96 |
|
|
|
(4 |
) |
|
|
2,168 |
|
|
|
(13 |
) |
|
Corporate notes and bonds |
|
|
3,111 |
|
|
|
(43 |
) |
|
|
301 |
|
|
|
(13 |
) |
|
|
3,412 |
|
|
|
(56 |
) |
|
Municipal securities |
|
|
45 |
|
|
|
(1 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
45 |
|
|
|
(1 |
) |
|
Common and preferred stock |
|
|
75 |
|
|
|
(6 |
) |
|
|
8 |
|
|
|
(4 |
) |
|
|
83 |
|
|
|
(10 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
91,112 |
|
|
$ |
(1,130 |
) |
|
$ |
4,877 |
|
|
$ |
(127 |
) |
|
$ |
95,989 |
|
|
$ |
(1,257 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 Months |
|
|
12 Months or Greater |
|
|
|
|
|
Total |
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
(In millions) |
|
Fair Value |
|
|
Unrealized |
|
|
Fair Value |
|
|
Unrealized |
|
|
Total |
|
|
||||||||
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
U.S. government and agency securities |
|
$ |
87,558 |
|
|
$ |
(348 |
) |
|
$ |
371 |
|
|
$ |
(12 |
) |
|
$ |
87,929 |
|
|
$ |
(360 |
) |
|
Foreign government bonds |
|
|
4,006 |
|
|
|
(2 |
) |
|
|
23 |
|
|
|
(11 |
) |
|
|
4,029 |
|
|
|
(13 |
) |
|
Mortgage- and asset-backed securities |
|
|
1,068 |
|
|
|
(3 |
) |
|
|
198 |
|
|
|
(1 |
) |
|
|
1,266 |
|
|
|
(4 |
) |
|
Corporate notes and bonds |
|
|
669 |
|
|
|
(8 |
) |
|
|
177 |
|
|
|
(4 |
) |
|
|
846 |
|
|
|
(12 |
) |
|
Common and preferred stock |
|
|
69 |
|
|
|
(6 |
) |
|
|
148 |
|
|
|
(28 |
) |
|
|
217 |
|
|
|
(34 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
93,370 |
|
|
$ |
(367 |
) |
|
$ |
917 |
|
|
$ |
(56 |
) |
|
$ |
94,287 |
|
|
$ |
(423 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
Cost Basis |
|
|
Estimated Fair Value |
|
||
|
|
|
|||||||
|
|
|
|
|
|||||
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Due in one year or less |
|
$ |
31,590 |
|
|
$ |
31,451 |
|
|
Due after one year through five years |
|
|
76,422 |
|
|
|
75,810 |
|
|
Due after five years through 10 years |
|
|
21,765 |
|
|
|
21,396 |
|
|
Due after 10 years |
|
|
924 |
|
|
|
922 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
130,701 |
|
|
$ |
129,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
Liabilities |
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
(In millions) |
|
Short-term |
|
Other |
|
Equity and |
|
Other Long-term Assets |
|
Other |
|
Other Long-term Liabilities |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-designated Hedge Derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
$ |
10 |
|
|
$ |
221 |
|
|
$ |
0 |
|
|
$ |
25 |
|
|
$ |
(193 |
) |
|
$ |
(4 |
) |
|
Equity contracts |
|
|
2 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(7 |
) |
|
|
0 |
|
|
Interest rate contracts |
|
|
11 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(2 |
) |
|
|
0 |
|
|
Credit contracts |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(1 |
) |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
23 |
|
|
$ |
221 |
|
|
$ |
0 |
|
|
$ |
25 |
|
|
$ |
(203 |
) |
|
$ |
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Designated Hedge Derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
$ |
95 |
|
|
$ |
174 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
Equity contracts |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
95 |
|
|
$ |
174 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross amounts of derivatives |
|
$ |
118 |
|
|
$ |
395 |
|
|
$ |
0 |
|
|
$ |
25 |
|
|
$ |
(203 |
) |
|
$ |
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross derivatives either offset or subject to an enforceable master netting agreement |
|
$ |
113 |
|
|
$ |
395 |
|
|
$ |
0 |
|
|
$ |
25 |
|
|
$ |
(203 |
) |
|
$ |
(4 |
) |
|
Gross amounts of derivatives offset on the balance sheet |
|
|
(14 |
) |
|
|
(135 |
) |
|
|
0 |
|
|
|
(3 |
) |
|
|
150 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amounts presented on the balance sheet |
|
|
99 |
|
|
|
260 |
|
|
|
0 |
|
|
|
22 |
|
|
|
(53 |
) |
|
|
(1 |
) |
|
Gross amounts of derivatives not offset on the balance sheet |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
Cash collateral received |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(235 |
) |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount |
|
$ |
99 |
|
|
$ |
260 |
|
|
$ |
0 |
|
|
$ |
22 |
|
|
$ |
(288 |
) |
|
$ |
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
Liabilities |
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
(In millions) |
|
Short-term |
|
Other |
|
Equity and |
|
Other Long-term Assets |
|
Other |
|
Other Long-term Liabilities |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-designated Hedge Derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
$ |
9 |
|
|
$ |
203 |
|
|
$ |
0 |
|
|
$ |
6 |
|
|
$ |
(134 |
) |
|
$ |
(8 |
) |
|
Equity contracts |
|
|
3 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(6 |
) |
|
|
0 |
|
|
Interest rate contracts |
|
|
3 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(7 |
) |
|
|
0 |
|
|
Credit contracts |
|
|
5 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(1 |
) |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
20 |
|
|
$ |
203 |
|
|
$ |
0 |
|
|
$ |
6 |
|
|
$ |
(148 |
) |
|
$ |
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Designated Hedge Derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
$ |
80 |
|
|
$ |
133 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
(3 |
) |
|
$ |
0 |
|
|
Equity contracts |
|
|
0 |
|
|
|
0 |
|
|
|
67 |
|
|
|
0 |
|
|
|
(186 |
) |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
80 |
|
|
$ |
133 |
|
|
$ |
67 |
|
|
$ |
0 |
|
|
$ |
(189 |
) |
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross amounts of derivatives |
|
$ |
100 |
|
|
$ |
336 |
|
|
$ |
67 |
|
|
$ |
6 |
|
|
$ |
(337 |
) |
|
$ |
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross derivatives either offset or subject to an enforceable master netting agreement |
|
$ |
100 |
|
|
$ |
336 |
|
|
$ |
67 |
|
|
$ |
6 |
|
|
$ |
(334 |
) |
|
$ |
(8 |
) |
|
Gross amounts of derivatives offset on the balance sheet |
|
|
(20 |
) |
|
|
(132 |
) |
|
|
(67 |
) |
|
|
(8 |
) |
|
|
221 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amounts presented on the balance sheet |
|
|
80 |
|
|
|
204 |
|
|
|
0 |
|
|
|
(2 |
) |
|
|
(113 |
) |
|
|
(1 |
) |
|
Gross amounts of derivatives not offset on the balance sheet |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
Cash collateral received |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
(228 |
) |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amount |
|
$ |
80 |
|
|
$ |
204 |
|
|
$ |
0 |
|
|
$ |
(2 |
) |
|
$ |
(341 |
) |
|
$ |
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Foreign Exchange Contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Derivatives |
|
$ |
25 |
|
|
$ |
441 |
|
|
$ |
(797 |
) |
|
Hedged items |
|
|
78 |
|
|
|
(386 |
) |
|
|
838 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amount of ineffectiveness |
|
$ |
103 |
|
|
$ |
55 |
|
|
$ |
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Equity Contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Derivatives |
|
$ |
(324 |
) |
|
$ |
(74 |
) |
|
$ |
(76 |
) |
|
Hedged items |
|
|
324 |
|
|
|
74 |
|
|
|
76 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amount of ineffectiveness |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of equity contracts excluded from effectiveness assessment |
|
$ |
80 |
|
|
$ |
(80 |
) |
|
$ |
(10 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Effective Portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Gains recognized in other comprehensive income (net of tax of $11, $4, and $24) |
|
$ |
219 |
|
|
$ |
328 |
|
|
$ |
351 |
|
|
Gains reclassified from accumulated other comprehensive income (loss) into revenue |
|
|
185 |
|
|
|
555 |
|
|
|
625 |
|
|
|
|
|
|
|||||||||
|
Amount Excluded from Effectiveness Assessment and Ineffective Portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Losses recognized in other income (expense), net |
|
|
(255 |
) |
|
|
(389 |
) |
|
|
(354 |
) |
|
|
|
|||||||||||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Foreign exchange contracts |
|
$ |
(33 |
) |
|
$ |
(117 |
) |
|
$ |
(55 |
) |
|
Equity contracts |
|
|
(87 |
) |
|
|
(114 |
) |
|
|
(21 |
) |
|
Interest rate contracts |
|
|
(15 |
) |
|
|
14 |
|
|
|
10 |
|
|
Credit contracts |
|
|
(2 |
) |
|
|
5 |
|
|
|
(1 |
) |
|
Other contracts |
|
|
0 |
|
|
|
(22 |
) |
|
|
(87 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
(137 |
) |
|
$ |
(234 |
) |
|
$ |
(154 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
Level 1 |
|
|
|
Level 2 |
|
|
|
Level 3 |
|
|
|
Gross Fair Value |
|
|
|
Netting |
(a) |
|
|
Net Fair |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds |
|
$ |
246 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
246 |
|
|
$ |
0 |
|
|
$ |
246 |
|
|
Commercial paper |
|
|
0 |
|
|
|
2,513 |
|
|
|
0 |
|
|
|
2,513 |
|
|
|
0 |
|
|
|
2,513 |
|
|
Certificates of deposit |
|
|
0 |
|
|
|
2,058 |
|
|
|
0 |
|
|
|
2,058 |
|
|
|
0 |
|
|
|
2,058 |
|
|
U.S. government and agency securities |
|
|
107,015 |
|
|
|
1,742 |
|
|
|
0 |
|
|
|
108,757 |
|
|
|
0 |
|
|
|
108,757 |
|
|
Foreign government bonds |
|
|
22 |
|
|
|
5,054 |
|
|
|
0 |
|
|
|
5,076 |
|
|
|
0 |
|
|
|
5,076 |
|
|
Mortgage- and asset-backed securities |
|
|
0 |
|
|
|
3,855 |
|
|
|
0 |
|
|
|
3,855 |
|
|
|
0 |
|
|
|
3,855 |
|
|
Corporate notes and bonds |
|
|
0 |
|
|
|
6,894 |
|
|
|
15 |
|
|
|
6,909 |
|
|
|
0 |
|
|
|
6,909 |
|
|
Municipal securities |
|
|
0 |
|
|
|
307 |
|
|
|
0 |
|
|
|
307 |
|
|
|
0 |
|
|
|
307 |
|
|
Common and preferred stock |
|
|
287 |
|
|
|
0 |
|
|
|
18 |
|
|
|
305 |
|
|
|
0 |
|
|
|
305 |
|
|
Derivatives |
|
|
1 |
|
|
|
535 |
|
|
|
2 |
|
|
|
538 |
|
|
|
(152 |
) |
|
|
386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
107,571 |
|
|
$ |
22,958 |
|
|
$ |
35 |
|
|
$ |
130,564 |
|
|
$ |
(152 |
) |
|
$ |
130,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives and other |
|
$ |
1 |
|
|
$ |
206 |
|
|
$ |
0 |
|
|
$ |
207 |
|
|
$ |
(153 |
) |
|
$ |
54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
Level 1 |
|
|
|
Level 2 |
|
|
|
Level 3 |
|
|
|
Gross Fair Value |
|
|
|
Netting |
(a) |
|
|
Net Fair |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds |
|
$ |
1,478 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
1,478 |
|
|
$ |
0 |
|
|
$ |
1,478 |
|
|
Commercial paper |
|
|
0 |
|
|
|
319 |
|
|
|
0 |
|
|
|
319 |
|
|
|
0 |
|
|
|
319 |
|
|
Certificates of deposit |
|
|
0 |
|
|
|
1,358 |
|
|
|
0 |
|
|
|
1,358 |
|
|
|
0 |
|
|
|
1,358 |
|
|
U.S. government and agency securities |
|
|
109,228 |
|
|
|
2,616 |
|
|
|
0 |
|
|
|
111,844 |
|
|
|
0 |
|
|
|
111,844 |
|
|
Foreign government bonds |
|
|
0 |
|
|
|
5,187 |
|
|
|
0 |
|
|
|
5,187 |
|
|
|
0 |
|
|
|
5,187 |
|
|
Mortgage- and asset-backed securities |
|
|
0 |
|
|
|
3,934 |
|
|
|
0 |
|
|
|
3,934 |
|
|
|
0 |
|
|
|
3,934 |
|
|
Corporate notes and bonds |
|
|
0 |
|
|
|
4,829 |
|
|
|
1 |
|
|
|
4,830 |
|
|
|
0 |
|
|
|
4,830 |
|
|
Municipal securities |
|
|
0 |
|
|
|
327 |
|
|
|
0 |
|
|
|
327 |
|
|
|
0 |
|
|
|
327 |
|
|
Common and preferred stock |
|
|
2,414 |
|
|
|
1,994 |
|
|
|
18 |
|
|
|
4,426 |
|
|
|
0 |
|
|
|
4,426 |
|
|
Derivatives |
|
|
1 |
|
|
|
508 |
|
|
|
0 |
|
|
|
509 |
|
|
|
(227 |
) |
|
|
282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
113,121 |
|
|
$ |
21,072 |
|
|
$ |
19 |
|
|
$ |
134,212 |
|
|
$ |
(227 |
) |
|
$ |
133,985 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives and other |
|
$ |
0 |
|
|
$ |
345 |
|
|
$ |
39 |
|
|
$ |
384 |
|
|
$ |
(228 |
) |
|
$ |
156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
These amounts represent the impact of netting derivative assets and derivative liabilities when a legally enforceable master netting agreement exists and fair value adjustments related to our own credit risk and counterparty credit risk. |
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value of assets measured at fair value on a recurring basis |
|
$ |
130,412 |
|
|
$ |
133,985 |
|
|
Cash |
|
|
3,942 |
|
|
|
3,624 |
|
|
Common and preferred stock measured at fair value on a nonrecurring basis |
|
|
999 |
|
|
|
1,073 |
|
|
Other investments measured at fair value on a nonrecurring basis |
|
|
557 |
|
|
|
523 |
|
|
Less derivative net assets classified as other current and long-term assets |
|
|
(282 |
) |
|
|
(202 |
) |
|
Other |
|
|
2 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recorded basis of investment components |
|
$ |
135,630 |
|
|
$ |
139,004 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|||||||
|
|
|
|||||||
|
|
|
|
|
|||||
|
June 30, |
|
2018 |
|
|
2017 |
|
||
|
|
|
|
||||||
|
Raw materials |
|
$ |
655 |
|
|
$ |
797 |
|
|
Work in process |
|
|
54 |
|
|
|
145 |
|
|
Finished goods |
|
|
1,953 |
|
|
|
1,239 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
2,662 |
|
|
$ |
2,181 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|||||||
|
|
|
|||||||
|
|
|
|
|
|||||
|
June 30, |
|
2018 |
|
|
2017 |
|
||
|
|
|
|
||||||
|
Land |
|
$ |
1,254 |
|
|
$ |
1,107 |
|
|
Buildings and improvements |
|
|
20,604 |
|
|
|
16,284 |
|
|
Leasehold improvements |
|
|
4,735 |
|
|
|
5,064 |
|
|
Computer equipment and software |
|
|
27,633 |
|
|
|
21,414 |
|
|
Furniture and equipment |
|
|
4,457 |
|
|
|
4,044 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total, at cost |
|
|
58,683 |
|
|
|
47,913 |
|
|
Accumulated depreciation |
|
|
(29,223 |
) |
|
|
(24,179 |
) |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total, net |
|
$ |
29,460 |
|
|
$ |
23,734 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|||
|
|
|
|
||
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,328 |
|
|
Short-term investments |
|
|
2,110 |
|
|
Other current assets |
|
|
697 |
|
|
Property and equipment |
|
|
1,529 |
|
|
Intangible assets |
|
|
7,887 |
|
|
Goodwill (a) |
|
|
16,803 |
|
|
Short-term debt (b) |
|
|
(1,323 |
) |
|
Other current liabilities |
|
|
(1,117 |
) |
|
Deferred income taxes |
|
|
(774 |
) |
|
Other |
|
|
(131 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchase price |
|
$ |
27,009 |
|
|
|
|
|
|
|
|
(a) |
Goodwill was assigned to our Productivity and Business Processes segment. The goodwill was primarily attributed to increased synergies that are expected to be achieved from the integration of LinkedIn. None of the goodwill is expected to be deductible for income tax purposes. |
|
(b) |
Convertible senior notes issued by LinkedIn on November 12, 2014, substantially all of which were redeemed after our acquisition of LinkedIn. The remaining $18 million of notes are not redeemable and are included in long-term debt in our consolidated balance sheets. Refer to Note 12 – Debt for further information. |
|
(In millions) |
|
Amount |
|
|
Weighted Average Life |
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Customer-related |
|
$ |
3,607 |
|
|
|
7 years |
|
|
Marketing-related (trade names) |
|
|
2,148 |
|
|
|
20 years |
|
|
Technology-based |
|
|
2,109 |
|
|
|
3 years |
|
|
Contract-based |
|
|
23 |
|
|
|
5 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of intangible assets acquired |
|
$ |
7,887 |
|
|
|
9 years |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30, |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
$ |
2,271 |
|
|
Operating loss |
|
|
|
(924 |
) |
|
|
|
|
|
|
|
|
(In millions, except earnings per share) |
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
98,291 |
|
|
$ |
94,490 |
|
|
Net income |
|
|
25,179 |
|
|
|
19,128 |
|
|
Diluted earnings per share |
|
|
3.21 |
|
|
|
2.38 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
June 30, 2016 |
|
Acquisitions |
|
Other |
|
June 30, 2017 |
|
Acquisitions |
|
Other |
|
June 30, |
|
||||||||||||||
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
Productivity and Business Processes |
|
|
$ |
6,678 |
|
|
$ |
17,072 |
(a) |
|
$ |
(11 |
) |
|
$ |
23,739 |
|
|
$ |
72 |
|
|
$ |
12 |
|
|
$ |
23,823 |
|
|
Intelligent Cloud |
|
|
|
5,467 |
|
|
|
49 |
|
|
|
39 |
|
|
|
5,555 |
|
|
|
164 |
|
|
|
(16 |
) |
|
|
5,703 |
|
|
More Personal Computing |
|
|
|
5,727 |
|
|
|
115 |
|
|
|
(14 |
) |
|
|
5,828 |
|
|
|
394 |
|
|
|
(65 |
) |
|
|
6,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
$ |
17,872 |
|
|
$ |
17,236 |
|
|
$ |
14 |
|
|
$ |
35,122 |
|
|
$ |
630 |
|
|
$ |
(69 |
) |
|
$ |
35,683 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Includes goodwill related to LinkedIn and other acquisitions. Refer to Note 9 – Business Combinations for further information. |
|
(In millions) |
|
Gross |
|
|
Accumulated |
|
|
Net Carrying |
|
|
Gross |
|
|
Accumulated |
|
|
Net Carrying |
|
||||||
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
June 30, |
|
|
|
|
|
|
|
2018 |
|
|
|
|
|
|
|
|
2017 |
|
||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Technology-based |
|
$ |
7,220 |
|
|
$ |
(5,018 |
) |
|
$ |
2,202 |
|
|
$ |
7,765 |
|
|
$ |
(4,318 |
) |
|
$ |
3,447 |
|
|
Customer-related |
|
|
4,031 |
|
|
|
(1,205 |
) |
|
|
2,826 |
|
|
|
4,045 |
|
|
|
(692 |
) |
|
|
3,353 |
|
|
Marketing-related |
|
|
4,006 |
|
|
|
(1,071 |
) |
|
|
2,935 |
|
|
|
4,016 |
|
|
|
(829 |
) |
|
|
3,187 |
|
|
Contract-based |
|
|
679 |
|
|
|
(589 |
) |
|
|
90 |
|
|
|
841 |
|
|
|
(722 |
) |
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
15,936 |
|
|
$ |
(7,883 |
) |
|
$ |
8,053 |
|
|
$ |
16,667 |
|
|
$ |
(6,561 |
) |
|
$ |
10,106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
Amount |
|
|
Weighted Average Life |
|
|
Amount |
|
|
Weighted Average Life |
|
||||
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|||||||||||
|
Year Ended June 30, |
|
2018 |
|
|
|
|
|
2017 |
|
|
|
|
||||
|
|
|
|
|
|
||||||||||||
|
Technology-based |
|
$ |
178 |
|
|
|
4 years |
|
|
$ |
2,265 |
|
|
|
2 years |
|
|
Marketing-related |
|
|
14 |
|
|
|
5 years |
|
|
|
2,148 |
|
|
|
19 years |
|
|
Contract-based |
|
|
14 |
|
|
|
4 years |
|
|
|
63 |
|
|
|
6 years |
|
|
Customer-related |
|
|
13 |
|
|
|
5 years |
|
|
|
3,607 |
|
|
|
7 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
219 |
|
|
|
5 years |
|
|
$ |
8,083 |
|
|
|
9 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|||
|
|
|
|
||
|
Year Ending June 30, |
|
|
|
|
|
|
|
|||
|
2019 |
|
$ |
1,785 |
|
|
2020 |
|
|
1,260 |
|
|
2021 |
|
|
1,043 |
|
|
2022 |
|
|
949 |
|
|
2023 |
|
|
806 |
|
|
Thereafter |
|
|
2,210 |
|
|
|
|
|||
|
|
|
|
|
|
|
Total |
|
$ |
8,053 |
|
|
|
|
|
|
|
|
(In millions, except interest rates) |
|
Face Value June 30, 2018 |
|
|
Face Value June 30, 2017 |
|
|
|
Stated Interest Rate |
|
|
|
Effective Interest Rate |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 15, 2017 |
|
$ |
0 |
|
|
$ |
600 |
|
|
|
0.875% |
|
|
|
1.084% |
|
|
May 1, 2018 |
|
|
0 |
|
|
|
450 |
|
|
|
1.000% |
|
|
|
1.106% |
|
|
November 3, 2018 |
|
|
1,750 |
|
|
|
1,750 |
|
|
|
1.300% |
|
|
|
1.396% |
|
|
December 6, 2018 |
|
|
1,250 |
|
|
|
1,250 |
|
|
|
1.625% |
|
|
|
1.824% |
|
|
June 1, 2019 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
4.200% |
|
|
|
4.379% |
|
|
August 8, 2019 |
|
|
2,500 |
|
|
|
2,500 |
|
|
|
1.100% |
|
|
|
1.203% |
|
|
November 1, 2019 |
|
|
18 |
|
|
|
18 |
|
|
|
0.500% |
|
|
|
0.500% |
|
|
February 6, 2020 |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
1.850% |
|
|
|
1.952% |
|
|
February 12, 2020 |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
1.850% |
|
|
|
1.935% |
|
|
October 1, 2020 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
3.000% |
|
|
|
3.137% |
|
|
November 3, 2020 |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
2.000% |
|
|
|
2.093% |
|
|
February 8, 2021 |
|
|
500 |
|
|
|
500 |
|
|
|
4.000% |
|
|
|
4.082% |
|
|
August 8, 2021 |
|
|
2,750 |
|
|
|
2,750 |
|
|
|
1.550% |
|
|
|
1.642% |
|
|
December 6, 2021 (a) |
|
|
2,044 |
|
|
|
1,996 |
|
|
|
2.125% |
|
|
|
2.233% |
|
|
February 6, 2022 |
|
|
1,750 |
|
|
|
1,750 |
|
|
|
2.400% |
|
|
|
2.520% |
|
|
February 12, 2022 |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
2.375% |
|
|
|
2.466% |
|
|
November 3, 2022 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
2.650% |
|
|
|
2.717% |
|
|
November 15, 2022 |
|
|
750 |
|
|
|
750 |
|
|
|
2.125% |
|
|
|
2.239% |
|
|
May 1, 2023 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
2.375% |
|
|
|
2.465% |
|
|
August 8, 2023 |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
2.000% |
|
|
|
2.101% |
|
|
December 15, 2023 |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
3.625% |
|
|
|
3.726% |
|
|
February 6, 2024 |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
2.875% |
|
|
|
3.041% |
|
|
February 12, 2025 |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
2.700% |
|
|
|
2.772% |
|
|
November 3, 2025 |
|
|
3,000 |
|
|
|
3,000 |
|
|
|
3.125% |
|
|
|
3.176% |
|
|
August 8, 2026 |
|
|
4,000 |
|
|
|
4,000 |
|
|
|
2.400% |
|
|
|
2.464% |
|
|
February 6, 2027 |
|
|
4,000 |
|
|
|
4,000 |
|
|
|
3.300% |
|
|
|
3.383% |
|
|
December 6, 2028 (a) |
|
|
2,044 |
|
|
|
1,996 |
|
|
|
3.125% |
|
|
|
3.218% |
|
|
May 2, 2033 (a) |
|
|
642 |
|
|
|
627 |
|
|
|
2.625% |
|
|
|
2.690% |
|
|
February 12, 2035 |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
3.500% |
|
|
|
3.604% |
|
|
November 3, 2035 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
4.200% |
|
|
|
4.260% |
|
|
August 8, 2036 |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
3.450% |
|
|
|
3.510% |
|
|
February 6, 2037 |
|
|
2,500 |
|
|
|
2,500 |
|
|
|
4.100% |
|
|
|
4.152% |
|
|
June 1, 2039 |
|
|
750 |
|
|
|
750 |
|
|
|
5.200% |
|
|
|
5.240% |
|
|
October 1, 2040 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
4.500% |
|
|
|
4.567% |
|
|
February 8, 2041 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
5.300% |
|
|
|
5.361% |
|
|
November 15, 2042 |
|
|
900 |
|
|
|
900 |
|
|
|
3.500% |
|
|
|
3.571% |
|
|
May 1, 2043 |
|
|
500 |
|
|
|
500 |
|
|
|
3.750% |
|
|
|
3.829% |
|
|
December 15, 2043 |
|
|
500 |
|
|
|
500 |
|
|
|
4.875% |
|
|
|
4.918% |
|
|
February 12, 2045 |
|
|
1,750 |
|
|
|
1,750 |
|
|
|
3.750% |
|
|
|
3.800% |
|
|
November 3, 2045 |
|
|
3,000 |
|
|
|
3,000 |
|
|
|
4.450% |
|
|
|
4.492% |
|
|
August 8, 2046 |
|
|
4,500 |
|
|
|
4,500 |
|
|
|
3.700% |
|
|
|
3.743% |
|
|
February 6, 2047 |
|
|
3,000 |
|
|
|
3,000 |
|
|
|
4.250% |
|
|
|
4.287% |
|
|
February 12, 2055 |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
4.000% |
|
|
|
4.063% |
|
|
November 3, 2055 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
4.750% |
|
|
|
4.782% |
|
|
August 8, 2056 |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
3.950% |
|
|
|
4.033% |
|
|
February 6, 2057 |
|
|
2,000 |
|
|
|
2,000 |
|
|
|
4.500% |
|
|
|
4.528% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
76,898 |
|
|
$ |
77,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Euro-denominated debt securities. |
|
(In millions) |
|
|
|
|
|
|
|
|||
|
|
|
|
||
|
Year Ending June 30, |
|
|
|
|
|
|
|
|||
|
2019 |
|
$ |
4,000 |
|
|
2020 |
|
|
5,518 |
|
|
2021 |
|
|
3,750 |
|
|
2022 |
|
|
8,044 |
|
|
2023 |
|
|
2,750 |
|
|
Thereafter |
|
|
52,836 |
|
|
|
|
|||
|
|
|
|||
|
Total |
|
$ |
76,898 |
|
|
|
|
|
|
|
|
(In millions) |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Current Taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal |
|
$ |
19,764 |
|
|
$ |
2,739 |
|
|
$ |
545 |
|
|
U.S. state and local |
|
|
934 |
|
|
|
30 |
|
|
|
136 |
|
|
Foreign |
|
|
4,348 |
|
|
|
2,472 |
|
|
|
1,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current taxes |
|
$ |
25,046 |
|
|
$ |
5,241 |
|
|
$ |
2,621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal |
|
$ |
(4,292 |
) |
|
$ |
(554 |
) |
|
$ |
1,919 |
|
|
U.S. state and local |
|
|
(458 |
) |
|
|
269 |
|
|
|
111 |
|
|
Foreign |
|
|
(393 |
) |
|
|
(544 |
) |
|
|
449 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred taxes |
|
$ |
(5,143 |
) |
|
$ |
(829 |
) |
|
$ |
2,479 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
$ |
19,903 |
|
|
$ |
4,412 |
|
|
$ |
5,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
U.S. |
|
$ |
11,527 |
|
|
$ |
6,843 |
|
|
$ |
5,125 |
|
|
Foreign |
|
|
24,947 |
|
|
|
23,058 |
|
|
|
20,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
36,474 |
|
|
$ |
29,901 |
|
|
$ |
25,639 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Federal statutory rate |
|
|
28.1% |
|
|
|
35.0% |
|
|
|
35.0% |
|
|
Effect of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign earnings taxed at lower rates |
|
|
(7.8)% |
|
|
|
(11.6)% |
|
|
|
(14.5)% |
|
|
Impacts of TCJA |
|
|
37.7% |
|
|
|
0% |
|
|
|
0% |
|
|
Phone business losses |
|
|
0% |
|
|
|
(5.7)% |
|
|
|
1.0% |
|
|
Excess tax benefits relating to stock-based compensation |
|
|
(2.5)% |
|
|
|
(2.1)% |
|
|
|
(1.6)% |
|
|
Interest, net |
|
|
1.2% |
|
|
|
1.4% |
|
|
|
0.9% |
|
|
Other reconciling items, net |
|
|
(2.1)% |
|
|
|
(2.2)% |
|
|
|
(0.9)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective rate |
|
|
54.6% |
|
|
|
14.8% |
|
|
|
19.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
|
June 30, |
|
2018 |
|
|
2017 |
|
||||
|
|
|
|
||||||||
|
Deferred Income Tax Assets |
|
|
|
|
|
|
|
|
||
|
|
|
|
||||||||
|
Stock-based compensation expense |
|
$ |
460 |
|
|
$ |
777 |
|
||
|
Accruals, reserves, and other expenses |
|
|
1,832 |
|
|
|
1,859 |
|
||
|
Loss and credit carryforwards |
|
|
3,369 |
|
|
|
4,809 |
|
||
|
Depreciation and amortization |
|
|
351 |
|
|
|
53 |
|
||
|
Other |
|
|
56 |
|
|
|
255 |
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Deferred income tax assets |
|
|
6,068 |
|
|
|
7,753 |
|
||
|
Less valuation allowance |
|
|
(3,186 |
) |
|
|
(3,310 |
) |
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Deferred income tax assets, net of valuation allowance |
|
$ |
2,882 |
|
|
$ |
4,443 |
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Deferred Income Tax Liabilities |
|
|
|
|
|
|
|
|
||
|
|
|
|
||||||||
|
Foreign earnings |
|
$ |
0 |
|
|
$ |
(1,134 |
) |
||
|
Unrealized gain on investments and debt |
|
|
0 |
|
|
|
(1,384 |
) |
||
|
Unearned revenue |
|
|
(639 |
) |
|
|
(5,760 |
) |
||
|
Depreciation and amortization |
|
|
(1,103 |
) |
|
|
(1,630 |
) |
||
|
Other |
|
|
(312 |
) |
|
|
(21 |
) |
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Deferred income tax liabilities |
|
$ |
(2,054 |
) |
|
$ |
(9,929 |
) |
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Net deferred income tax assets (liabilities) |
|
$ |
828 |
|
|
$ |
(5,486 |
) |
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
||||||||
|
Reported As |
|
|
|
|
|
|
|
|
||
|
|
|
|
||||||||
|
Other long-term assets |
|
$ |
1,369 |
|
|
$ |
248 |
|
||
|
Long-term deferred income tax liabilities |
|
|
(541 |
) |
|
|
(5,734 |
) |
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Net deferred income tax assets (liabilities) |
|
$ |
828 |
|
|
$ |
(5,486 |
) |
||
|
|
|
|
|
|
|
|
|
|
||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Balance, beginning of year |
|
$ |
11,737 |
|
|
$ |
10,164 |
|
|
$ |
9,599 |
|
|
Decreases related to settlements |
|
|
(193 |
) |
|
|
(4 |
) |
|
|
(201 |
) |
|
Increases for tax positions related to the current year |
|
|
1,445 |
|
|
|
1,277 |
|
|
|
1,086 |
|
|
Increases for tax positions related to prior years |
|
|
151 |
|
|
|
397 |
|
|
|
115 |
|
|
Decreases for tax positions related to prior years |
|
|
(1,176 |
) |
|
|
(49 |
) |
|
|
(317 |
) |
|
Decreases due to lapsed statutes of limitations |
|
|
(3 |
) |
|
|
(48 |
) |
|
|
(118 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of year |
|
$ |
11,961 |
|
|
$ |
11,737 |
|
|
$ |
10,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
||
|
|
|
|||||||
|
|
|
|
|
|||||
|
June 30, |
|
2018 |
|
|
2017 |
|
||
|
|
|
|
||||||
|
Productivity and Business Processes |
|
$ |
14,864 |
|
|
$ |
12,692 |
|
|
Intelligent Cloud |
|
|
14,706 |
|
|
|
11,152 |
|
|
More Personal Computing |
|
|
3,150 |
|
|
|
2,812 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
32,720 |
|
|
$ |
26,656 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30, 2018 |
|
|
|
|
|
|
|
|||
|
Balance, beginning of period |
|
$ |
26,656 |
|
|
Deferral of revenue |
|
|
61,142 |
|
|
Recognition of unearned revenue |
|
|
(55,078 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period |
|
$ |
32,720 |
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Year Ended June 30, |
|
2018 |
|
|
|
2017 |
|
|
|
2016 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Operating lease cost |
|
$ |
1,585 |
|
|
$ |
1,412 |
|
|
$ |
936 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Finance lease cost: |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Amortization of right-of-use assets |
|
$ |
243 |
|
|
$ |
104 |
|
|
$ |
28 |
|
||
|
Interest on lease liabilities |
|
|
175 |
|
|
|
68 |
|
|
|
28 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Total finance lease cost |
|
$ |
418 |
|
|
$ |
172 |
|
|
$ |
56 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Year Ended June 30, |
|
2018 |
|
|
|
2017 |
|
|
|
2016 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Operating cash flows from operating leases |
|
$ |
1,522 |
|
|
$ |
1,157 |
|
|
$ |
936 |
|
||
|
Operating cash flows from finance leases |
|
|
175 |
|
|
|
68 |
|
|
|
28 |
|
||
|
Financing cash flows from finance leases |
|
|
144 |
|
|
|
46 |
|
|
|
6 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Right-of-use assets obtained in exchange for lease obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Operating leases |
|
|
1,571 |
|
|
|
1,270 |
|
|
|
1,062 |
|
||
|
Finance leases |
|
|
1,933 |
|
|
|
1,773 |
|
|
|
413 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
(In millions, except lease term and discount rate) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
||||||
|
June 30, |
|
2018 |
|
|
2017 |
|
||
|
|
|
|
||||||
|
Operating Leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease right-of-use assets |
|
$ |
6,686 |
|
|
$ |
6,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities |
|
$ |
1,399 |
|
|
$ |
1,423 |
|
|
Operating lease liabilities |
|
|
5,568 |
|
|
|
5,372 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating lease liabilities |
|
$ |
6,967 |
|
|
$ |
6,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance Leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, gross |
|
$ |
4,543 |
|
|
$ |
2,658 |
|
|
Accumulated depreciation |
|
|
(404 |
) |
|
|
(161 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
$ |
4,139 |
|
|
$ |
2,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities |
|
$ |
176 |
|
|
$ |
113 |
|
|
Other long-term liabilities |
|
|
4,125 |
|
|
|
2,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total finance lease liabilities |
|
$ |
4,301 |
|
|
$ |
2,538 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Remaining Lease Term |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
|
7 years |
|
|
|
7 years |
|
|
Finance leases |
|
|
13 years |
|
|
|
13 years |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Discount Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
|
2.7% |
|
|
|
2.5% |
|
|
Finance leases |
|
|
5.2% |
|
|
|
4.7% |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Year Ending June 30, |
|
Operating Leases |
|
|
Finance Leases |
|
||
|
|
|
|
||||||
|
2019 |
|
$ |
1,492 |
|
|
$ |
386 |
|
|
2020 |
|
|
1,347 |
|
|
|
393 |
|
|
2021 |
|
|
1,086 |
|
|
|
401 |
|
|
2022 |
|
|
902 |
|
|
|
408 |
|
|
2023 |
|
|
721 |
|
|
|
410 |
|
|
Thereafter |
|
|
2,157 |
|
|
|
4,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total lease payments |
|
|
7,705 |
|
|
|
6,034 |
|
|
Less imputed interest |
|
|
(738 |
) |
|
|
(1,733 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
6,967 |
|
|
$ |
4,301 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Balance, beginning of year |
|
|
7,708 |
|
|
|
7,808 |
|
|
|
8,027 |
|
|
Issued |
|
|
68 |
|
|
|
70 |
|
|
|
75 |
|
|
Repurchased |
|
|
(99 |
) |
|
|
(170 |
) |
|
|
(294 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance, end of year |
|
|
7,677 |
|
|
|
7,708 |
|
|
|
7,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
||||||
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
|
First Quarter |
|
|
22 |
|
|
$ |
1,600 |
|
|
|
63 |
|
|
$ |
3,550 |
|
|
|
89 |
|
|
$ |
4,000 |
|
|
Second Quarter |
|
|
22 |
|
|
|
1,800 |
|
|
|
59 |
|
|
|
3,533 |
|
|
|
66 |
|
|
|
3,600 |
|
|
Third Quarter |
|
|
34 |
|
|
|
3,100 |
|
|
|
25 |
|
|
|
1,600 |
|
|
|
69 |
|
|
|
3,600 |
|
|
Fourth Quarter |
|
|
21 |
|
|
|
2,100 |
|
|
|
23 |
|
|
|
1,600 |
|
|
|
70 |
|
|
|
3,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
|
99 |
|
|
$ |
8,600 |
|
|
|
170 |
|
|
$ |
10,283 |
|
|
|
294 |
|
|
$ |
14,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declaration Date |
Dividend Per Share |
|
|
Record Date |
|
Amount |
|
|
Payment Date |
|
||||||
|
|
|
|||||||||||||||
|
|
|
|||||||||||||||
|
Fiscal Year 2018 |
|
|
|
|
|
(in millions) |
|
|
|
|
||||||
|
|
|
|
|
|
||||||||||||
|
September 19, 2017 |
|
$ |
0.42 |
|
|
|
November 16, 2017 |
|
|
$ |
3,238 |
|
|
|
December 14, 2017 |
|
|
November 29, 2017 |
|
|
0.42 |
|
|
|
February 15, 2018 |
|
|
|
3,232 |
|
|
|
March 8, 2018 |
|
|
March 12, 2018 |
|
|
0.42 |
|
|
|
May 17, 2018 |
|
|
|
3,226 |
|
|
|
June 14, 2018 |
|
|
June 13, 2018 |
|
|
0.42 |
|
|
|
August 16, 2018 |
|
|
|
3,224 |
|
|
|
September 13, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 20, 2016 |
|
$ |
0.39 |
|
|
|
November 17, 2016 |
|
|
$ |
3,024 |
|
|
|
December 8, 2016 |
|
|
November 30, 2016 |
|
|
0.39 |
|
|
|
February 16, 2017 |
|
|
|
3,012 |
|
|
|
March 9, 2017 |
|
|
March 14, 2017 |
|
|
0.39 |
|
|
|
May 18, 2017 |
|
|
|
3,009 |
|
|
|
June 8, 2017 |
|
|
June 13, 2017 |
|
|
0.39 |
|
|
|
August 17, 2017 |
|
|
|
3,003 |
|
|
|
September 14, 2017 |
|
|
|
|
|||||||||||||||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Balance, beginning of period |
|
$ |
134 |
|
|
$ |
352 |
|
|
$ |
590 |
|
|
Unrealized gains, net of tax of $11, $4, and $24 |
|
|
218 |
|
|
|
328 |
|
|
|
351 |
|
|
Reclassification adjustments for gains included in revenue |
|
|
(185 |
) |
|
|
(555 |
) |
|
|
(625 |
) |
|
Tax expense included in provision for income taxes |
|
|
6 |
|
|
|
9 |
|
|
|
36 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified from accumulated other comprehensive income |
|
|
(179 |
) |
|
|
(546 |
) |
|
|
(589 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change related to derivatives, net of tax of $5, $(5), and $(12) |
|
|
39 |
|
|
|
(218 |
) |
|
|
(238 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period |
|
$ |
173 |
|
|
$ |
134 |
|
|
$ |
352 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|||||||||
|
Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Balance, beginning of period |
|
$ |
1,825 |
|
|
$ |
2,941 |
|
|
$ |
3,169 |
|
|
Unrealized gains (losses), net of tax of $(427), $267, and $120 |
|
|
(1,146 |
) |
|
|
517 |
|
|
|
219 |
|
|
Reclassification adjustments for gains included in other income (expense), net |
|
|
(2,309 |
) |
|
|
(2,513 |
) |
|
|
(688 |
) |
|
Tax expense included in provision for income taxes |
|
|
738 |
|
|
|
880 |
|
|
|
241 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Amounts reclassified from accumulated other comprehensive income |
|
|
(1,571 |
) |
|
|
(1,633 |
) |
|
|
(447 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Net change related to investments, net of tax of $(1,165), $(613), and $(121) |
|
|
(2,717 |
) |
|
|
(1,116 |
) |
|
|
(228 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance, end of period |
|
$ |
(892 |
) |
|
$ |
1,825 |
|
|
$ |
2,941 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|||||||||
|
Translation Adjustments and Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Balance, beginning of period |
|
$ |
(1,332 |
) |
|
$ |
(1,499 |
) |
|
$ |
(1,237 |
) |
|
Translation adjustments and other, net of tax effects of $0, $9, and $(33) |
|
|
(178 |
) |
|
|
167 |
|
|
|
(262 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance, end of period |
|
$ |
(1,510 |
) |
|
$ |
(1,332 |
) |
|
$ |
(1,499 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect of accounting change |
|
|
42 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Accumulated other comprehensive income (loss), end of period |
|
$ |
(2,187 |
) |
|
$ |
627 |
|
|
$ |
1,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Stock-based compensation expense |
|
$ |
3,940 |
|
|
$ |
3,266 |
|
|
$ |
2,668 |
|
|
Income tax benefits related to stock-based compensation |
|
|
823 |
|
|
|
1,066 |
|
|
|
882 |
|
|
|
|
|||||||||||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Dividends per share (quarterly amounts) |
|
|
$0.39 - $0.42 |
|
|
|
$0.36 - $0.39 |
|
|
|
$0.31 - $0.36 |
|
|
Interest rates |
|
|
1.7% - 2.9% |
|
|
|
1.2% - 2.2% |
|
|
|
1.1% - 1.8% |
|
|
|
|
|||||||||||
|
Shares |
|
|
Weighted Average Grant-Date Fair Value |
|
||||
|
|
|
|||||||
|
|
|
|||||||
|
(In millions) |
|
|
|
|
||||
|
|
||||||||
|
Stock Awards |
|
|||||||
|
|
|
|
||||||
|
Nonvested balance, beginning of year |
|
|
201 |
|
|
$ |
46.32 |
|
|
Granted (a) |
|
|
70 |
|
|
|
75.88 |
|
|
Vested |
|
|
(80 |
) |
|
|
45.74 |
|
|
Forfeited |
|
|
(17 |
) |
|
|
53.41 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Nonvested balance, end of year |
|
|
174 |
|
|
|
57.85 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Includes 3 million, 2 million, and 1 million of PSUs granted at target and performance adjustments above target levels for fiscal years 2018, 2017, and 2016, respectively. |
|
(Shares in millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Shares purchased |
|
|
13 |
|
|
|
13 |
|
|
|
15 |
|
|
Average price per share |
|
$ |
76.40 |
|
|
$ |
56.36 |
|
|
$ |
44.83 |
|
|
|
|
|||||||||||
|
|
• |
Office Commercial, including Office 365 subscriptions and Office licensed on-premises, comprising Office, Exchange, SharePoint, Skype for Business, and Microsoft Teams, and related Client Access Licenses (“CALs”). |
|
|
• |
Office Consumer, including Office 365 subscriptions and Office licensed on-premises, and Office Consumer Services, including Skype, Outlook.com, and OneDrive. |
|
|
• |
LinkedIn, including Talent Solutions, Marketing Solutions, and Premium Subscriptions. |
|
|
• |
Dynamics business solutions, including Dynamics ERP on-premises, Dynamics CRM on-premises, and Dynamics 365, a set of cloud-based applications across ERP and CRM. |
|
|
• |
Server products and cloud services, including Microsoft SQL Server, Windows Server, Visual Studio, System Center, and related CALs, and Azure. |
|
|
• |
Enterprise Services, including Premier Support Services and Microsoft Consulting Services. |
|
|
• |
Windows, including Windows OEM licensing and other non-volume licensing of the Windows operating system; Windows Commercial, comprising volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings; patent licensing; Windows Internet of Things (“IoT”); and MSN advertising. |
|
|
• |
Devices, including Microsoft Surface, PC accessories, and other intelligent devices. |
|
|
• |
Gaming, including Xbox hardware and Xbox software and services, comprising Xbox Live transactions, subscriptions, and advertising (“Xbox Live”), video games, and third-party video game royalties. |
|
|
• |
Search. |
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|||||||||||
|
Year Ended June 30, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Productivity and Business Processes |
|
$ |
35,865 |
|
|
$ |
29,870 |
|
|
$ |
25,792 |
|
|
Intelligent Cloud |
|
|
32,219 |
|
|
|
27,407 |
|
|
|
24,952 |
|
|
More Personal Computing |
|
|
42,276 |
|
|
|
39,294 |
|
|
|
40,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
110,360 |
|
|
$ |
96,571 |
|
|
$ |
91,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Productivity and Business Processes |
|
$ |
12,924 |
|
|
$ |
11,389 |
|
|
$ |
11,756 |
|
|
Intelligent Cloud |
|
|
11,524 |
|
|
|
9,127 |
|
|
|
9,249 |
|
|
More Personal Computing |
|
|
10,610 |
|
|
|
8,815 |
|
|
|
6,183 |
|
|
Corporate and Other |
|
|
0 |
|
|
|
(306 |
) |
|
|
(1,110 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
35,058 |
|
|
$ |
29,025 |
|
|
$ |
26,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|||||||||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
United States (a) |
|
$ |
55,926 |
|
|
$ |
51,078 |
|
|
$ |
46,416 |
|
|
Other countries |
|
|
54,434 |
|
|
|
45,493 |
|
|
|
44,738 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
110,360 |
|
|
$ |
96,571 |
|
|
$ |
91,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Includes billings to OEMs and certain multinational organizations because of the nature of these businesses and the impracticability of determining the geographic source of the revenue. |
|
(In millions) |
|
|
|
|||||||||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
Office products and cloud services |
|
$ |
28,316 |
|
|
$ |
25,573 |
|
|
$ |
23,868 |
|
|
Server products and cloud services |
|
|
26,129 |
|
|
|
21,649 |
|
|
|
19,062 |
|
|
Windows |
|
|
19,518 |
|
|
|
18,593 |
|
|
|
17,548 |
|
|
Gaming |
|
|
10,353 |
|
|
|
9,051 |
|
|
|
9,202 |
|
|
Search advertising |
|
|
7,012 |
|
|
|
6,219 |
|
|
|
5,428 |
|
|
Enterprise Services |
|
|
5,846 |
|
|
|
5,542 |
|
|
|
5,659 |
|
|
Devices |
|
|
5,134 |
|
|
|
5,062 |
|
|
|
7,888 |
|
|
|
|
|
5,259 |
|
|
|
2,271 |
|
|
|
0 |
|
|
Other |
|
|
2,793 |
|
|
|
2,611 |
|
|
|
2,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
110,360 |
|
|
$ |
96,571 |
|
|
$ |
91,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|||||||||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
June 30, |
|
2018 |
|
|
2017 |
|
|
2016 |
|
|||
|
|
|
|
|
|||||||||
|
United States |
|
$ |
44,501 |
|
|
$ |
42,730 |
|
|
$ |
25,145 |
|
|
Ireland |
|
|
12,843 |
|
|
|
12,889 |
|
|
|
2,099 |
|
|
Luxembourg |
|
|
6,856 |
|
|
|
6,854 |
|
|
|
6,868 |
|
|
Other countries |
|
|
15,682 |
|
|
|
13,044 |
|
|
|
11,047 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
79,882 |
|
|
$ |
75,517 |
|
|
$ |
45,159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
September 30 |
|
|
December 31 |
|
|
March 31 |
|
|
June 30 |
|
|
Total |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
24,538 |
|
|
$ |
28,918 |
|
|
$ |
26,819 |
|
|
$ |
30,085 |
|
|
$ |
110,360 |
|
|
Gross margin |
|
|
16,260 |
|
|
|
17,854 |
|
|
|
17,550 |
|
|
|
20,343 |
|
|
|
72,007 |
|
|
Operating income |
|
|
7,708 |
|
|
|
8,679 |
|
|
|
8,292 |
|
|
|
10,379 |
|
|
|
35,058 |
|
|
Net income (loss) (a) |
|
|
6,576 |
|
|
|
(6,302 |
) |
|
|
7,424 |
|
|
|
8,873 |
|
|
|
16,571 |
|
|
Basic earnings (loss) per share |
|
|
0.85 |
|
|
|
(0.82 |
) |
|
|
0.96 |
|
|
|
1.15 |
|
|
|
2.15 |
|
|
Diluted earnings (loss) per share (b) |
|
|
0.84 |
|
|
|
(0.82 |
) |
|
|
0.95 |
|
|
|
1.14 |
|
|
|
2.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2017 (c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
21,928 |
|
|
$ |
25,826 |
|
|
$ |
23,212 |
|
|
$ |
25,605 |
|
|
$ |
96,571 |
|
|
Gross margin |
|
|
14,084 |
|
|
|
15,925 |
|
|
|
15,152 |
|
|
|
17,149 |
|
|
|
62,310 |
|
|
Operating income |
|
|
6,715 |
|
|
|
7,905 |
|
|
|
6,723 |
|
|
|
7,682 |
(d) |
|
|
29,025 |
(d) |
|
Net income |
|
|
5,667 |
|
|
|
6,267 |
|
|
|
5,486 |
|
|
|
8,069 |
(d) |
|
|
25,489 |
(d) |
|
Basic earnings per share |
|
|
0.73 |
|
|
|
0.81 |
|
|
|
0.71 |
|
|
|
1.05 |
|
|
|
3.29 |
|
|
Diluted earnings per share |
|
|
0.72 |
|
|
|
0.80 |
|
|
|
0.70 |
|
|
|
1.03 |
(d) |
|
|
3.25 |
(d) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Reflects the net charge (benefit) related to the TCJA of $13.8 billion for the second quarter, $(104) million for the fourth quarter, and $13.7 billion for fiscal year 2018. |
|
(b) |
Reflects the net charge (benefit) related to the TCJA, which decreased (increased) diluted EPS $1.78 for the second quarter, $(0.01) for the fourth quarter, and $1.75 for fiscal year 2018. |
|
(c) |
On December 8, 2016, we acquired LinkedIn Corporation. LinkedIn has been included in our consolidated results of operations starting on the acquisition date. |
|
(d) |
Includes $306 million of employee severance expenses primarily related to our sales and marketing restructuring plan, which decreased operating income, net income, and diluted EPS by $306 million, $243 million, and $0.04, respectively. |
|
(a) |
Financial Statements and Schedules |
|
Index to Financial Statements |
Page |
|
||
|
|
|
|||
|
|
|
|||
|
|
51 |
|
||
|
|
|
|||
|
|
52 |
|
||
|
|
|
|||
|
|
53 |
|
||
|
|
|
|||
|
|
54 |
|
||
|
|
|
|||
|
|
55 |
|
||
|
|
|
|||
|
|
56 |
|
||
|
|
|
|||
|
|
97 |
|
||
|
(b) |
Exhibit Listing |
|
|
|
|
|
|
Incorporated by Reference |
|
||||||||||||||
|
Exhibit |
|
Exhibit Description |
|
Filed Herewith |
|
Form |
|
|
Period Ending |
|
|
Exhibit |
|
|
Filing Date |
|
||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
3.1 |
|
Amended and Restated Articles of Incorporation of Microsoft Corporation |
|
|
|
|
8-K |
|
|
|
|
|
|
|
3.1 |
|
|
|
12/1/16 |
|
|
|
|
|
|
|
|
|
||||||||||||||
|
3.2 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
3.2 |
|
|
|
6/14/17 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
4.1 |
|
|
|
|
|
S-3ASR |
|
|
|
|
|
|
|
4.1 |
|
|
|
11/20/08 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
4.2 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.2 |
|
|
|
5/15/09 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
4.5 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.2 |
|
|
|
9/27/10 |
|
|
|
|
|
|
|
|
Incorporated by Reference |
|
||||||||||||||
|
Exhibit |
|
Exhibit Description |
|
Filed Herewith |
|
Form |
|
|
Period Ending |
|
|
Exhibit |
|
|
Filing Date |
|
||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
4.6 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.2 |
|
|
|
2/8/11 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
4.7 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.1 |
|
|
|
11/7/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.8 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.1 |
|
|
|
5/1/13 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
4.9 |
|
|
|
|
|
8-K |
|
|
|
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4.2 |
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5/1/13 |
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||||||||||||||
|
4.10 |
|
|
|
|
|
8-K |
|
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|
|
|
|
|
4.1 |
|
|
|
12/6/13 |
|
|
|
|
|
|
|
|
Incorporated by Reference |
|
||||||||||||||
|
Exhibit |
|
Exhibit Description |
|
Filed Herewith |
|
Form |
|
|
Period Ending |
|
|
Exhibit |
|
|
Filing Date |
|
||||
|
|
|
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|||||||||||||
|
4.11 |
|
|
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|
|
8-K |
|
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|
4.2 |
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12/6/13 |
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||||||||||||||
|
4.12 |
|
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|
8-K |
|
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4.1 |
|
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|
2/12/15 |
|
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|||||||||||||
|
4.13 |
|
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8-K |
|
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4.1 |
|
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|
11/3/15 |
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4.14 |
|
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8-K |
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|
4.1 |
|
|
|
8/5/16 |
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|
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|
Incorporated by Reference |
|
||||||||||||||
|
Exhibit |
|
Exhibit Description |
|
Filed Herewith |
|
Form |
|
|
Period Ending |
|
|
Exhibit |
|
|
Filing Date |
|
||||
|
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|
4.15 |
|
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|
8-K |
|
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|
4.1 |
|
|
|
2/3/17 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
10.1* |
|
|
|
|
|
10-Q |
|
|
|
9/30/16 |
|
|
|
10.1 |
|
|
|
10/20/16 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
10.4* |
|
|
|
|
|
10-K |
|
|
|
6/30/12 |
|
|
|
10.4 |
|
|
|
7/26/12 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
10.5* |
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
10.6* |
|
|
|
|
|
DEF14A |
|
|
|
|
|
|
|
Annex C |
|
|
|
10/16/17 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
10.7* |
|
Form of Stock Award Agreement Under the Microsoft Corporation 2017 Stock Plan |
|
|
|
|
10-Q |
|
|
|
3/31/2018 |
|
|
|
10.26 |
|
|
|
4/26/18 |
|
|
|
|
|
|
|
|
|
||||||||||||||
|
10.8* |
|
Form of Performance Stock Award Agreement Under the Microsoft Corporation 2017 Stock Plan |
|
|
|
|
10-Q |
|
|
|
3/31/2018 |
|
|
|
10.27 |
|
|
|
4/26/18 |
|
|
|
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|
|
|
|
|
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|
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|
|
|
|
10.12 |
|
|
|
|
|
10-Q |
|
|
|
9/30/16 |
|
|
|
10.12 |
|
|
|
10/20/16 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
10.13 |
|
|
|
|
|
10-Q |
|
|
|
9/30/16 |
|
|
|
10.13 |
|
|
|
10/20/16 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
10.14* |
|
Microsoft Corporation Deferred Compensation Plan for Non-Employee Directors |
|
|
|
|
10-Q |
|
|
|
12/31/17 |
|
|
|
10.14 |
|
|
|
1/31/18 |
|
|
|
|
|
|
|
|
|
||||||||||||||
|
10.17* |
|
|
|
|
|
10-Q |
|
|
|
9/30/15 |
|
|
|
10.17 |
|
|
|
10/22/15 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
10.18* |
|
|
|
|
|
10-Q
|
|
|
|
9/30/15 |
|
|
|
10.18 |
|
|
|
10/22/15 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
10.19* |
|
|
|
|
|
10-Q |
|
|
|
9/30/16 |
|
|
|
10.17 |
|
|
|
10/20/16 |
|
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|
|
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|
10.20* |
|
|
|
|
|
10-Q |
|
|
|
9/30/16 |
|
|
|
10.18 |
|
|
|
10/20/16 |
|
|
|
|
|
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|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference |
|
||||||||||||||
|
Exhibit |
|
Exhibit Description |
|
Filed Herewith |
|
Form |
|
|
Period Ending |
|
|
Exhibit |
|
|
Filing Date |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21* |
|
|
|
|
|
10-Q |
|
|
|
9/30/16 |
|
|
|
10.25 |
|
|
|
10/20/16 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
10.22* |
|
|
|
|
|
10-Q |
|
|
|
9/30/16 |
|
|
|
10.22 |
|
|
|
10/20/16 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
10.23* |
|
Offer Letter, dated February 3, 2014, between Microsoft Corporation and Satya Nadella |
|
|
|
|
8-K |
|
|
|
|
|
|
|
10.1 |
|
|
|
2/4/14 |
|
|
|
|
|
|
|
|
|
||||||||||||||
|
10.24* |
|
Long-Term Performance Stock Award Agreement between Microsoft Corporation and Satya Nadella |
|
|
|
|
10-Q |
|
|
|
12/31/14 |
|
|
|
10.24 |
|
|
|
1/26/15 |
|
|
|
|
|
|
|
|
|
||||||||||||||
|
10.25* |
|
|
|
|
|
10-Q |
|
|
|
9/30/15 |
|
|
|
10.25 |
|
|
|
10/22/15 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
12 |
|
|
X |
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
||||||||||||||
|
21 |
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
23.1 |
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
31.1 |
|
Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
31.2 |
|
Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
32.1** |
|
Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
32.2** |
|
Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
101.INS |
|
XBRL Instance Document |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH |
|
XBRL Taxonomy Extension Schema |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB |
|
XBRL Taxonomy Extension Label Linkbase |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Indicates a management contract or compensatory plan or arrangement |
|
** |
Furnished, not filed |
|
MICROSOFT CORPORATION |
|
|
|
/S/ FRANK H. BROD |
|
Frank H. Brod |
|
Corporate Vice President, Finance and Administration; Chief Accounting Officer (Principal Accounting Officer) |
|
Signature |
|
Title |
|
|
||
|
|
|
|
|
/s/ JOHN W. THOMPSON
John W. Thompson |
|
Chairman |
|
|
|
|
|
/s/ SATYA NADELLA
Satya Nadella |
|
Director and Chief Executive Officer |
|
|
|
|
|
/s/ WILLIAM H. GATES III
William H. Gates III |
|
Director |
|
|
|
|
|
/s/ REID HOFFMAN
Reid Hoffman |
|
Director |
|
|
|
|
|
/s/ HUGH F. JOHNSTON
Hugh F. Johnston |
|
Director |
|
|
|
|
|
/s/ TERI L. LIST-STOLL
Teri L. List-Stoll |
|
Director |
|
|
|
|
|
/s/ CHARLES H. NOSKI
Charles H. Noski |
|
Director |
|
|
|
|
|
/s/ HELMUT PANKE
Helmut Panke |
|
Director |
|
|
|
|
|
/s/ SANDRA E. PETERSON
Sandra E. Peterson |
|
Director |
|
|
|
|
|
/s/ PENNY S. PRITZKER
Penny S. Pritzker |
|
Director |
|
|
|
|
|
/s/ CHARLES W. SCHARF
Charles W. Scharf |
|
Director |
|
|
|
|
|
/s/ ARNE M. SORENSON
Arne M. Sorenson |
|
Director |
|
|
||
|
|
|
|
|
/s/ JOHN W. STANTON
John W. Stanton |
|
Director |
|
|
|
|
|
/s/ PADMASREE WARRIOR
Padmasree Warrior |
|
Director |
|
|
|
|
|
/s/ AMY E. HOOD
Amy E. Hood |
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
|
|
|
|
|
/s/ FRANK H. BROD
Frank H. Brod |
|
Corporate Vice President, Finance and Administration; Chief Accounting Officer (Principal Accounting Officer) |
|
☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
WASHINGTON |
|
91-1144442 |
|
(STATE OF INCORPORATION) |
|
(I.R.S. ID) |
|
|
|
|
|
|
|
Securities registered pursuant to Section 12(b) of the Act: |
|
|
|
|
|
|
|
|
|
|
|
Title of each class |
|
Trading Symbol |
|
Name of exchange on which registered |
|
|
|
|
|
|
|
COMMON STOCK, $0.00000625 par value per share |
|
MSFT |
|
NASDAQ |
|
2.125% Notes due 2021 |
|
MSFT |
|
New York Stock Exchange |
|
3.125% Notes due 2028 |
|
MSFT |
|
New York Stock Exchange |
|
2.625% Notes due 2033 |
|
MSFT |
|
New York Stock Exchange |
|
|
|
|
|
|
|
Securities registered pursuant to Section 12(g) of the Act: |
|
|
|
|
|
|
|
|
|
|
|
NONE |
|
|
|
|
|
|
||||
|
Large accelerated filer ☒ |
|
Accelerated filer ☐ |
|
Non-accelerated filer ☐ |
|
Smaller reporting company ☐ |
|
|
|
Emerging growth company ☐ |
|
|
|
|
|
|
Page |
|
|
|
|
|
|
|
||||
|
PART I |
|
|
|
|
|
||
|
|
|
|
|
||||
|
|
|
Item 1. |
|
|
3 |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
15 |
|
|
|
|
|
|
|
||||
|
|
|
Item 1A. |
|
|
17 |
|
|
|
|
|
|
|
||||
|
|
|
Item 1B. |
|
|
29 |
|
|
|
|
|
|
|
||||
|
|
|
Item 2. |
|
|
29 |
|
|
|
|
|
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|
||||
|
|
|
Item 3. |
|
|
29 |
|
|
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|
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|
||||
|
|
|
Item 4. |
|
|
29 |
|
|
|
|
|
|
|
||||
|
PART II |
|
|
|
|
|
||
|
|
|
|
|
||||
|
|
|
Item 5. |
|
|
30 |
|
|
|
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|
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|
||||
|
|
|
Item 6. |
|
|
31 |
|
|
|
|
|
|
|
||||
|
|
|
Item 7. |
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
32 |
|
|
|
|
|
|
||||
|
|
|
Item 7A. |
|
|
50 |
|
|
|
|
|
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|
||||
|
|
|
Item 8. |
|
|
51 |
|
|
|
|
|
|
|
||||
|
|
|
Item 9. |
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
|
96 |
|
|
|
|
|
|
||||
|
|
|
Item 9A. |
|
|
96 |
|
|
|
|
|
|
|
||||
|
|
|
|
|
Report of Management on Internal Control over Financial Reporting |
|
96 |
|
|
|
|
|
|
||||
|
|
|
|
|
|
97 |
|
|
|
|
|
|
|
||||
|
|
|
Item 9B. |
|
|
98 |
|
|
|
|
|
|
|
||||
|
PART III |
|
|
|
|
|
||
|
|
|
|
|
||||
|
|
|
Item 10. |
|
|
98 |
|
|
|
|
|
|
|
||||
|
|
|
Item 11. |
|
|
98 |
|
|
|
|
|
|
|
||||
|
|
|
Item 12. |
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
|
98 |
|
|
|
|
|
|
||||
|
|
|
Item 13. |
|
Certain Relationships and Related Transactions, and Director Independence |
|
98 |
|
|
|
|
|
|
||||
|
|
|
Item 14. |
|
|
98 |
|
|
|
|
|
|
|
||||
|
PART IV |
|
|
|
|
|
||
|
|
|
|
|
||||
|
|
|
Item 15. |
|
|
99 |
|
|
|
|
|
|
|
||||
|
|
|
Item 16. |
|
|
104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105 |
|
|
|
|
• |
Reinvent productivity and business processes. |
|
|
• |
Build the intelligent cloud and intelligent edge platform. |
|
|
• |
Create more personal computing. |
|
|
• |
Transforming the workplace to deliver new modern, modular business applications to improve how people communicate, collaborate, learn, work, play, and interact with one another. |
|
|
• |
Building and running cloud-based services in ways that unleash new experiences and opportunities for businesses and individuals. |
|
|
• |
Applying AI to drive insights and act on our customer’s behalf by understanding and interpreting their needs using natural methods of communication. |
|
|
• |
Using Windows to fuel our cloud business and Microsoft 365 strategy, and to develop new categories of devices – both our own and third-party – on the intelligent edge. |
|
|
• |
Inventing new gaming experiences that bring people together around their shared love for games on any devices and pushing the boundaries of innovation with console and PC gaming by creating the next wave of entertainment. |
|
|
• |
Office Commercial, including Office 365 subscriptions and Office licensed on-premises, comprising Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, and Skype for Business, and related Client Access Licenses (“CALs”). |
|
|
• |
Office Consumer, including Office 365 subscriptions and Office licensed on-premises, and Office Consumer Services, including Skype, Outlook.com, and OneDrive. |
|
|
• |
LinkedIn, including Talent Solutions, Marketing Solutions, and Premium Subscriptions. |
|
|
• |
Dynamics business solutions, including Dynamics 365, a set of cloud-based applications across ERP and CRM, Dynamics ERP on-premises, and Dynamics CRM on-premises. |
|
|
• |
Server products and cloud services, including SQL Server, Windows Server, Visual Studio, System Center, and related CALs, GitHub, and Azure. |
|
|
• |
Enterprise Services, including Premier Support Services and Microsoft Consulting Services. |
|
|
• |
Windows, including Windows OEM licensing (“Windows OEM”) and other non-volume licensing of the Windows operating system; Windows Commercial, comprising volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings; patent licensing; Windows IoT; and MSN advertising. |
|
|
• |
Devices, including Surface, PC accessories, and other intelligent devices. |
|
|
• |
Gaming, including Xbox hardware and Xbox software and services, comprising Xbox Live transactions, subscriptions, cloud services, and advertising (“Xbox Live”), video games, and third-party video game royalties. |
|
|
• |
Search. |
|
|
• |
The mix of computing devices based on form factor and screen size. |
|
|
• |
Differences in device market demand between developed markets and growth markets. |
|
|
• |
Attachment of Windows to devices shipped. |
|
|
• |
Customer mix between consumer, small and medium businesses, and large enterprises. |
|
|
• |
Changes in inventory levels in the OEM channel. |
|
|
• |
Pricing changes and promotions, pricing variation that occurs when the mix of devices manufactured shifts from local and regional system builders to large multinational OEMs, and different pricing of Windows versions licensed. |
|
|
• |
Constraints in the supply chain of device components. |
|
|
• |
Piracy. |
|
|
• |
Cloud and AI, focuses on making IT professionals, developers, and their systems more productive and efficient through development of cloud infrastructure, server, database, CRM, ERP, management and development tools, AI cognitive services, and other business process applications and services for enterprises. |
|
|
• |
Experiences and Devices, focuses on instilling a unifying product ethos across our end-user experiences and devices, including Office, Windows, Enterprise Mobility and Management, and Surface. |
|
|
• |
AI and Research, focuses on our AI innovations and other forward-looking research and development efforts spanning infrastructure, services, applications, and search. |
|
|
• |
LinkedIn, focuses on our services that transform the way customers hire, market, sell, and learn. |
|
|
• |
Gaming, focuses on connecting gaming assets across the range of devices to grow and engage the Xbox Live member network through game experiences, streaming content, and social interaction. |
|
Name |
|
Age |
|
|
Position with the Company |
|
|
|
||||||
|
|
|
|
||||
|
Satya Nadella |
|
|
51 |
|
|
Chief Executive Officer |
|
Christopher C. Capossela |
|
|
49 |
|
|
Executive Vice President, Marketing and Consumer Business, and Chief Marketing Officer |
|
Jean-Philippe Courtois |
|
|
58 |
|
|
Executive Vice President and President, Microsoft Global Sales, Marketing and Operations |
|
Kathleen T. Hogan |
|
|
53 |
|
|
Executive Vice President, Human Resources |
|
Amy E. Hood |
|
|
47 |
|
|
Executive Vice President, Chief Financial Officer |
|
Margaret L. Johnson |
|
|
57 |
|
|
Executive Vice President, Business Development |
|
Bradford L. Smith |
|
|
60 |
|
|
President and Chief Legal Officer |
|
|
||||||
|
|
• |
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission (“SEC”) at www.sec.gov. |
|
|
• |
Information on our business strategies, financial results, and metrics for investors. |
|
|
• |
Announcements of investor conferences, speeches, and events at which our executives talk about our product, service, and competitive strategies. Archives of these events are also available. |
|
|
• |
Press releases on quarterly earnings, product and service announcements, legal developments, and international news. |
|
|
• |
Corporate governance information including our articles of incorporation, bylaws, governance guidelines, committee charters, codes of conduct and ethics, global corporate social responsibility initiatives, and other governance-related policies. |
|
|
• |
Other news and announcements that we may post from time to time that investors might find useful or interesting. |
|
|
• |
Opportunities to sign up for email alerts to have information pushed in real time. |
|
|
• |
A competing vertically-integrated model, in which a single firm controls the software and hardware elements of a product and related services, has succeeded with some consumer products such as personal computers, tablets, phones, gaming consoles, wearables, and other endpoint devices. Competitors pursuing this model also earn revenue from services integrated with the hardware and software platform, including applications and content sold through their integrated marketplaces. They may also be able to claim security and performance benefits from their vertically integrated offer. We also offer some vertically-integrated hardware and software products and services. To the extent we shift a portion of our business to a vertically integrated model we increase our cost of revenue and reduce our operating margins. |
|
|
• |
We derive substantial revenue from licenses of Windows operating systems on personal computers. We face significant competition from competing platforms developed for new devices and form factors such as smartphones and tablet computers. These devices compete on multiple bases including price and the perceived utility of the device and its platform. Users are increasingly turning to these devices to perform functions that in the past were performed by personal computers. Even if many users view these devices as complementary to a personal computer, the prevalence of these devices may make it more difficult to attract application developers to our PC operating system platforms. Competing with operating systems licensed at low or no cost may decrease our PC operating system margins. Popular products or services offered on competing platforms could increase their competitive strength. In addition, some of our devices compete with products made by our original equipment manufacturer (“OEM”) partners, which may affect their commitment to our platform. |
|
|
• |
Competing platforms have content and application marketplaces with scale and significant installed bases. The variety and utility of content and applications available on a platform are important to device purchasing decisions. Users may incur costs to move data and buy new content and applications when switching platforms. To compete, we must successfully enlist developers to write applications for our platform and ensure that these applications have high quality, security, customer appeal, and value. Efforts to compete with competitors’ content and application marketplaces may increase our cost of revenue and lower our operating margins. |
|
|
• |
Even as we transition more of our business to infrastructure-, platform-, and software-as-a-service business model, the license-based proprietary software model generates a substantial portion of our software revenue. We bear the costs of converting original ideas into software products through investments in research and development, offsetting these costs with the revenue received from licensing our products. Many of our competitors also develop and sell software to businesses and consumers under this model. |
|
|
• |
Other competitors develop and offer free applications, online services and content, and make money by selling third-party advertising. Advertising revenue funds development of products and services these competitors provide to users at no or little cost, competing directly with our revenue-generating products. |
|
|
• |
Some companies compete with us by modifying and then distributing open source software at little or no cost to end-users, and earning revenue on advertising or integrated products and services. These firms do not bear the full costs of research and development for the open source software. Some open source software mimics the features and functionality of our products. |
|
|
• |
Continuing to bring to market compelling cloud-based experiences that generate increasing traffic and market share. |
|
|
• |
Maintaining the utility, compatibility, and performance of our cloud-based services on the growing array of computing devices, including PCs, smartphones, tablets, gaming consoles, and other devices, as well as sensors and other endpoints. |
|
|
• |
Continuing to enhance the attractiveness of our cloud platforms to third-party developers. |
|
|
• |
Ensuring our cloud-based services meet the reliability expectations of our customers and maintain the security of their data. |
|
|
• |
Making our suite of cloud-based services platform-agnostic, available on a wide range of devices and ecosystems, including those of our competitors. |
|
|
• |
We may have to choose between withdrawing products from certain geographies to avoid fines or designing and developing alternative versions of those products to comply with government rulings, which may entail a delay in a product release and removing functionality that customers want or on which developers rely. |
|
|
• |
We may be required to make available licenses to our proprietary technologies on terms that do not reflect their fair market value or do not protect our associated intellectual property. |
|
|
• |
We are subject to a variety of ongoing commitments because of court or administrative orders, consent decrees, or other voluntary actions we have taken. If we fail to comply with these commitments, we may incur litigation costs and be subject to substantial fines or other remedial actions. |
|
|
• |
Our ability to realize anticipated Windows 10 post-sale monetization opportunities may be limited. |
|
|
• |
The introduction of new features, products, services, or terms of service that customers, users, or partners do not like. |
|
|
• |
Public scrutiny of our decisions regarding user privacy, data practices, or content. |
|
|
• |
Data security breaches, compliance failures, or actions of partners or individual employees. |
|
(Square feet in millions) |
|
|||||||||||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Location |
|
Owned |
|
|
Leased |
|
|
Total |
|
|||
|
|
|
|
|
|||||||||
|
U.S. |
|
|
18 |
|
|
|
14 |
|
|
|
32 |
|
|
International |
|
|
6 |
|
|
|
14 |
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
|
24 |
|
|
|
28 |
|
|
|
52 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period |
|
Total Number Purchased |
|
|
Average Price Paid |
|
|
Total Number of |
|
|
Approximate Dollar Value of Shares that May Yet be Purchased under the Plans |
|
|||||
|
|
|
||||||||||||||||
|
|
|
||||||||||||||||
|
|
|
(In millions) |
|
||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
April 1, 2019 – April 30, 2019 |
|
|
8,547,612 |
|
|
$ |
122.85 |
|
|
|
8,547,612 |
|
|
$ |
14,551 |
|
|
|
May 1, 2019 – May 31, 2019 |
|
|
14,029,339 |
|
|
|
126.32 |
|
|
|
14,029,339 |
|
|
|
12,778 |
|
|
|
June 1, 2019 – June 30, 2019 |
|
|
10,469,682 |
|
|
|
131.59 |
|
|
|
10,469,682 |
|
|
|
11,401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,046,633 |
|
|
|
|
|
|
|
33,046,633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declaration Date |
|
|
Record Date |
|
|
|
Payment Date |
|
|
|
Dividend Per Share |
|
|
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 12, 2019 |
|
|
August 15, 2019 |
|
|
|
September 12, 2019 |
|
|
$ |
0.46 |
|
|
$ |
3,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30, |
|
|
2019 |
(a) |
|
|
2018 |
|
|
|
2017 |
(d)(e) |
|
|
2016 |
(d) |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
125,843 |
|
|
$ |
110,360 |
|
|
$ |
96,571 |
|
|
$ |
91,154 |
|
|
$ |
93,580 |
|
|
Gross margin |
|
|
82,933 |
|
|
|
72,007 |
|
|
|
62,310 |
|
|
|
58,374 |
|
|
|
60,542 |
|
|
Operating income |
|
|
42,959 |
|
|
|
35,058 |
|
|
|
29,025 |
(f) |
|
|
26,078 |
(g) |
|
|
18,161 |
(h) |
|
Net income |
|
|
39,240 |
(b) |
|
|
16,571 |
(c) |
|
|
25,489 |
(f) |
|
|
20,539 |
(g) |
|
|
12,193 |
(h) |
|
Diluted earnings per share |
|
|
5.06 |
(b) |
|
|
2.13 |
(c) |
|
|
3.25 |
(f) |
|
|
2.56 |
(g) |
|
|
1.48 |
(h) |
|
Cash dividends declared per share |
|
|
1.84 |
|
|
|
1.68 |
|
|
|
1.56 |
|
|
|
1.44 |
|
|
|
1.24 |
|
|
Cash, cash equivalents, and short-term investments |
|
|
133,819 |
|
|
|
133,768 |
|
|
|
132,981 |
|
|
|
113,240 |
|
|
|
96,526 |
|
|
Total assets |
|
|
286,556 |
|
|
|
258,848 |
|
|
|
250,312 |
|
|
|
202,897 |
|
|
|
174,303 |
|
|
Long-term obligations |
|
|
114,806 |
|
|
|
117,642 |
|
|
|
106,856 |
|
|
|
66,705 |
|
|
|
44,574 |
|
|
Stockholders’ equity |
|
|
102,330 |
|
|
|
82,718 |
|
|
|
87,711 |
|
|
|
83,090 |
|
|
|
80,083 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
GitHub has been included in our consolidated results of operations starting on the October 25, 2018 acquisition date. |
|
(b) |
Includes a $2.6 billion net income tax benefit related to intangible property transfers and a $157 million net charge related to the enactment of the Tax Cuts and Jobs Act (“TCJA”), which together increased net income and diluted earnings per share (“EPS”) by $2.4 billion and $0.31, respectively. Refer to Note 12 – Income Taxes of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K) for further discussion. |
|
(c) |
Includes a $13.7 billion net charge related to the enactment of the TCJA, which decreased net income and diluted EPS by $13.7 billion and $1.75, respectively. Refer to Note 12 – Income Taxes of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K) for further discussion. |
|
(d) |
Reflects the impact of the adoption of new accounting standards in fiscal year 2018 related to revenue recognition and leases. |
|
(e) |
LinkedIn has been included in our consolidated results of operations starting on the December 8, 2016 acquisition date. |
|
(f) |
Includes $306 million of employee severance expenses primarily related to our sales and marketing restructuring plan, which decreased operating income, net income, and diluted EPS by $306 million, $243 million, and $0.04, respectively. |
|
(g) |
Includes $630 million of asset impairment charges related to our Phone business and $480 million of restructuring charges associated with our Phone business restructuring plans, which together decreased operating income, net income, and diluted EPS by $1.1 billion, $895 million, and $0.11, respectively. |
|
(h) |
Includes $7.5 billion of goodwill and asset impairment charges related to our Phone business and $2.5 billion of integration and restructuring expenses, primarily associated with our Phone business restructuring plans, which together decreased operating income, net income, and diluted EPS by $10.0 billion, $9.5 billion, and $1.15, respectively. |
|
|
• |
Commercial cloud revenue, which includes Microsoft Office 365 Commercial, Microsoft Azure, the commercial portion of LinkedIn, Microsoft Dynamics 365, and other commercial cloud properties, increased 43% to $38.1 billion. |
|
|
• |
Office Commercial revenue increased 13%, driven by Office 365 Commercial growth of 33%. |
|
|
• |
Office Consumer revenue increased 7%, and Office 365 Consumer subscribers increased to 34.8 million. |
|
|
• |
LinkedIn revenue increased 28%, with record levels of engagement highlighted by LinkedIn sessions growth of 27%. |
|
|
• |
Dynamics revenue increased 15%, driven by Dynamics 365 growth of 47%. |
|
|
• |
Server products and cloud services revenue, including GitHub, increased 25%, driven by Azure growth of 72%. |
|
|
• |
Enterprise Services revenue increased 5%. |
|
|
• |
Windows original equipment manufacturer licensing (“Windows OEM”) revenue increased 4%. |
|
|
• |
Windows Commercial revenue increased 14%. |
|
|
• |
Microsoft Surface revenue increased 23%. |
|
|
• |
Gaming revenue increased 10%, driven by Xbox software and services growth of 19%. |
|
|
• |
Search advertising revenue, excluding traffic acquisition costs, increased 13%. |
|
(In millions, except percentages and per share amounts) |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
Percentage Versus 2018 |
|
|
Percentage Versus 2017 |
|
|||||
|
|
|
|||||||||||||||||||
|
Revenue |
|
$ |
125,843 |
|
|
$ |
110,360 |
|
|
$ |
96,571 |
|
|
|
14% |
|
|
|
14% |
|
|
Gross margin |
|
|
82,933 |
|
|
|
72,007 |
|
|
|
62,310 |
|
|
|
15% |
|
|
|
16% |
|
|
Operating income |
|
|
42,959 |
|
|
|
35,058 |
|
|
|
29,025 |
|
|
|
23% |
|
|
|
21% |
|
|
Net income |
|
|
39,240 |
|
|
|
16,571 |
|
|
|
25,489 |
|
|
|
137% |
|
|
|
(35)% |
|
|
Diluted earnings per share |
|
|
5.06 |
|
|
|
2.13 |
|
|
|
3.25 |
|
|
|
138% |
|
|
|
(34)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating income |
|
|
42,959 |
|
|
|
35,058 |
|
|
|
29,331 |
|
|
|
23% |
|
|
|
20% |
|
|
Non-GAAP net income |
|
|
36,830 |
|
|
|
30,267 |
|
|
|
25,732 |
|
|
|
22% |
|
|
|
18% |
|
|
Non-GAAP diluted earnings per share |
|
|
4.75 |
|
|
|
3.88 |
|
|
|
3.29 |
|
|
|
22% |
|
|
|
18% |
|
|
|
|
|||||||||||||||||||
|
|
• |
Cost of revenue increased $4.6 billion or 12%, driven by growth in commercial cloud, Surface, and Gaming. |
|
|
• |
Research and development expenses increased $2.2 billion or 15%, driven by investments in cloud and artificial intelligence (“AI”) engineering, Gaming, LinkedIn, and GitHub. |
|
|
• |
Sales and marketing expenses increased $744 million or 4%, driven by investments in commercial sales capacity, LinkedIn, and GitHub, offset in part by a decrease in marketing. Sales and marketing expenses included a favorable foreign currency impact of 2%. |
|
|
• |
Cost of revenue increased $4.1 billion or 12%, mainly due to growth in our commercial cloud, Gaming, LinkedIn, and Search advertising, offset in part by a reduction in Phone cost of revenue. |
|
|
• |
Sales and marketing expenses increased $2.0 billion or 13%, primarily due to LinkedIn expenses and investments in commercial sales capacity, offset in part by a decrease in Windows marketing expenses. |
|
|
• |
Research and development expenses increased $1.7 billion or 13%, primarily due to investments in cloud engineering and LinkedIn expenses. |
|
|
• |
General and administrative expenses increased $273 million or 6%, primarily due to LinkedIn expenses. |
|
(In millions, except percentages) |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
Percentage Versus 2018 |
|
|
Percentage Versus 2017 |
|
|||||
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|||||||||||||||
|
Productivity and Business Processes |
|
$ |
41,160 |
|
|
$ |
35,865 |
|
|
$ |
29,870 |
|
|
|
15% |
|
|
|
20% |
|
|
Intelligent Cloud |
|
|
38,985 |
|
|
|
32,219 |
|
|
|
27,407 |
|
|
|
21% |
|
|
|
18% |
|
|
More Personal Computing |
|
|
45,698 |
|
|
|
42,276 |
|
|
|
39,294 |
|
|
|
8% |
|
|
|
8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
125,843 |
|
|
$ |
110,360 |
|
|
$ |
96,571 |
|
|
|
14% |
|
|
|
14% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Productivity and Business Processes |
|
$ |
16,219 |
|
|
$ |
12,924 |
|
|
$ |
11,389 |
|
|
|
25% |
|
|
|
13% |
|
|
Intelligent Cloud |
|
|
13,920 |
|
|
|
11,524 |
|
|
|
9,127 |
|
|
|
21% |
|
|
|
26% |
|
|
More Personal Computing |
|
|
12,820 |
|
|
|
10,610 |
|
|
|
8,815 |
|
|
|
21% |
|
|
|
20% |
|
|
Corporate and Other |
|
|
0 |
|
|
|
0 |
|
|
|
(306 |
) |
|
|
* |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
42,959 |
|
|
$ |
35,058 |
|
|
$ |
29,025 |
|
|
|
23% |
|
|
|
21% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Not meaningful. |
|
|
• |
Office Commercial revenue increased $3.2 billion or 13%, driven by Office 365 Commercial, offset in part by lower revenue from products licensed on-premises, reflecting a continued shift to cloud offerings. Office 365 Commercial grew 33%, due to growth in seats and higher average revenue per user. |
|
|
• |
Office Consumer revenue increased $286 million or 7%, driven by Office 365 Consumer, due to recurring subscription revenue and transactional strength in Japan. |
|
|
• |
LinkedIn revenue increased $1.5 billion or 28%, driven by growth across each line of business. |
|
|
• |
Dynamics revenue increased 15%, driven by Dynamics 365 growth. |
|
|
• |
Gross margin increased $4.1 billion or 15%, driven by growth in Office Commercial and LinkedIn. Gross margin percentage increased slightly, due to gross margin percentage improvement in LinkedIn and Office 365 Commercial, offset in part by an increased mix of cloud offerings. |
|
|
• |
Operating expenses increased $806 million or 6%, driven by investments in LinkedIn and cloud engineering, offset in part by a decrease in marketing. |
|
|
• |
Server products and cloud services revenue, including GitHub, increased $6.5 billion or 25%, driven by Azure. Azure revenue growth was 72%, due to higher infrastructure-as-a-service and platform-as-a-service consumption-based and per user-based services. Server products revenue increased 6%, due to continued demand for premium versions and hybrid solutions, GitHub, and demand ahead of end-of-support for SQL Server 2008 and Windows Server 2008. |
|
|
• |
Enterprise Services revenue increased $278 million or 5%, driven by growth in Premier Support Services and Microsoft Consulting Services. |
|
|
• |
Gross margin increased $4.8 billion or 22%, driven by growth in server products and cloud services revenue and cloud services scale and efficiencies. Gross margin percentage increased slightly, due to gross margin percentage improvement in Azure, offset in part by an increased mix of cloud offerings. |
|
|
• |
Operating expenses increased $2.4 billion or 22%, driven by investments in cloud and AI engineering, GitHub, and commercial sales capacity. |
|
|
• |
Windows revenue increased $877 million or 4%, driven by growth in Windows Commercial and Windows OEM, offset in part by a decline in patent licensing. Windows Commercial revenue increased 14%, driven by an increased mix of multi-year agreements that carry higher in-quarter revenue recognition. Windows OEM revenue increased 4%. Windows OEM Pro revenue grew 10%, ahead of the commercial PC market, driven by healthy Windows 10 demand. Windows OEM non-Pro revenue declined 7%, below the consumer PC market, driven by continued pressure in the entry level category. |
|
|
• |
Surface revenue increased $1.1 billion or 23%, with strong growth across commercial and consumer. |
|
|
• |
Gaming revenue increased $1.0 billion or 10%, driven by Xbox software and services growth of 19%, primarily due to third-party title strength and subscriptions growth, offset in part by a decline in Xbox hardware of 13% primarily due to a decrease in volume of consoles sold. |
|
|
• |
Search advertising revenue increased $616 million or 9%. Search advertising revenue, excluding traffic acquisition costs, increased 13%, driven by higher revenue per search. |
|
|
• |
Gross margin increased $2.0 billion or 9%, driven by growth in Windows, Gaming, and Search. Gross margin percentage increased slightly, due to a sales mix shift to higher gross margin businesses in Windows and Gaming. |
|
|
• |
Operating expenses decreased $172 million or 1%. |
|
|
• |
LinkedIn revenue increased $3.0 billion to $5.3 billion. Fiscal year 2018 included a full period of results, whereas fiscal year 2017 only included results from the date of acquisition on December 8, 2016. LinkedIn revenue primarily consisted of revenue from Talent Solutions. |
|
|
• |
Office Commercial revenue increased $2.4 billion or 11%, driven by Office 365 Commercial revenue growth, mainly due to growth in subscribers and average revenue per user, offset in part by lower revenue from products licensed on-premises, reflecting a continued shift to Office 365 Commercial. |
|
|
• |
Office Consumer revenue increased $382 million or 11%, driven by Office 365 Consumer revenue growth, mainly due to growth in subscribers. |
|
|
• |
Dynamics revenue increased 13%, driven by Dynamics 365 revenue growth. |
|
|
• |
Gross margin increased $4.4 billion or 19%, driven by LinkedIn and growth in Office Commercial. Gross margin percentage decreased slightly, due to an increased mix of cloud offerings, offset in part by gross margin percentage improvement in Office 365 Commercial and LinkedIn. LinkedIn cost of revenue increased $818 million to $1.7 billion, including $888 million of amortization for acquired intangible assets. |
|
|
• |
Operating expenses increased $2.9 billion or 25%, driven by LinkedIn expenses and investments in commercial sales capacity and cloud engineering. LinkedIn operating expenses increased $2.2 billion to $4.5 billion, including $617 million of amortization of acquired intangible assets. |
|
|
• |
Server products and cloud services revenue increased $4.5 billion or 21%, driven by Azure and server products licensed on-premises revenue growth. Azure revenue grew 91%, due to higher infrastructure-as-a-service and platform-as-a-service consumption-based and per user-based services. Server products licensed on-premises revenue increased 5%, mainly due to a higher mix of premium licenses for Windows Server and Microsoft SQL Server. |
|
|
• |
Enterprise Services revenue increased $304 million or 5%, driven by higher revenue from Premier Support Services and Microsoft Consulting Services, offset in part by a decline in revenue from custom support agreements. |
|
|
• |
Gross margin increased $3.1 billion or 16%, driven by growth in server products and cloud services revenue and cloud services scale and efficiencies. Gross margin percentage decreased, due to an increased mix of cloud offerings, offset in part by gross margin percentage improvement in Azure. |
|
|
• |
Operating expenses increased $683 million or 7%, driven by investments in commercial sales capacity and cloud engineering. |
|
|
• |
Windows revenue increased $925 million or 5%, driven by growth in Windows Commercial and Windows OEM, offset by a decline in patent licensing revenue. Windows Commercial revenue increased 12%, driven by multi-year agreement revenue growth. Windows OEM revenue increased 5%. Windows OEM Pro revenue grew 11%, ahead of a strengthening commercial PC market. Windows OEM non-Pro revenue declined 4%, below the consumer PC market, driven by continued pressure in the entry-level price category. |
|
|
• |
Gaming revenue increased $1.3 billion or 14%, driven by Xbox software and services revenue growth of 20%, mainly from third-party title strength. |
|
|
• |
Search advertising revenue increased $793 million or 13%. Search advertising revenue, excluding traffic acquisition costs, increased 16%, driven by growth in Bing, due to higher revenue per search and search volume. |
|
|
• |
Surface revenue increased $625 million or 16%, driven by a higher mix of premium devices and an increase in volumes sold, due to the latest editions of Surface. |
|
|
• |
Phone revenue decreased $525 million. |
|
|
• |
Gross margin increased $2.2 billion or 11%, driven by growth in Windows, Surface, Search, and Gaming. Gross margin percentage increased, primarily due to gross margin percentage improvement in Surface. |
|
|
• |
Operating expenses increased $391 million or 3%, driven by investments in Search, AI, and Gaming engineering and commercial sales capacity, offset in part by a decrease in Windows marketing expenses. |
|
(In millions, except percentages) |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
Percentage Change 2019 |
|
|
Percentage |
|
|||||
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Research and development |
|
$ |
16,876 |
|
|
$ |
14,726 |
|
|
$ |
13,037 |
|
|
|
15% |
|
|
|
13% |
|
|
As a percent of revenue |
|
|
13% |
|
|
|
13% |
|
|
|
13% |
|
|
|
0ppt |
|
|
|
0ppt |
|
|
|
|
|||||||||||||||||||
|
(In millions, except percentages) |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
Percentage Change 2019 |
|
|
Percentage |
|
|||||
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Sales and marketing |
|
$ |
18,213 |
|
|
$ |
17,469 |
|
|
$ |
15,461 |
|
|
|
4% |
|
|
|
13% |
|
|
As a percent of revenue |
|
|
14% |
|
|
|
16% |
|
|
|
16% |
|
|
|
(2)ppt |
|
|
|
0ppt |
|
|
|
|
|||||||||||||||||||
|
(In millions, except percentages) |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
Percentage Change 2019 |
|
|
Percentage |
|
|||||
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
General and administrative |
|
$ |
4,885 |
|
|
$ |
4,754 |
|
|
$ |
4,481 |
|
|
|
3% |
|
|
|
6% |
|
|
As a percent of revenue |
|
|
4% |
|
|
|
4% |
|
|
|
5% |
|
|
|
0ppt |
|
|
|
(1)ppt |
|
|
|
|
|||||||||||||||||||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|||||||||
|
Interest and dividends income |
|
$ |
2,762 |
|
|
$ |
2,214 |
|
|
$ |
1,387 |
|
|
Interest expense |
|
|
(2,686 |
) |
|
|
(2,733 |
) |
|
|
(2,222 |
) |
|
Net recognized gains on investments |
|
|
648 |
|
|
|
2,399 |
|
|
|
2,583 |
|
|
Net gains (losses) on derivatives |
|
|
144 |
|
|
|
(187 |
) |
|
|
(510 |
) |
|
Net losses on foreign currency remeasurements |
|
|
(82 |
) |
|
|
(218 |
) |
|
|
(111 |
) |
|
Other, net |
|
|
(57 |
) |
|
|
(59 |
) |
|
|
(251 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
729 |
|
|
$ |
1,416 |
|
|
$ |
876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except percentages and per share amounts) |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
Percentage |
|
|
Percentage |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
42,959 |
|
|
$ |
35,058 |
|
|
$ |
29,025 |
|
|
|
23% |
|
|
|
21% |
|
|
Net tax impact of transfer of intangible properties |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
* |
|
|
|
* |
|
|
Net tax impact of the TCJA |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
* |
|
|
|
* |
|
|
Restructuring expenses |
|
|
0 |
|
|
|
0 |
|
|
|
306 |
|
|
|
* |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating income |
|
$ |
42,959 |
|
|
$ |
35,058 |
|
|
$ |
29,331 |
|
|
|
23% |
|
|
|
20% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
39,240 |
|
|
$ |
16,571 |
|
|
$ |
25,489 |
|
|
|
137% |
|
|
|
(35)% |
|
|
Net tax impact of transfer of intangible properties |
|
|
(2,567 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
* |
|
|
|
* |
|
|
Net tax impact of the TCJA |
|
|
157 |
|
|
|
13,696 |
|
|
|
0 |
|
|
|
* |
|
|
|
* |
|
|
Restructuring expenses |
|
|
0 |
|
|
|
0 |
|
|
|
243 |
|
|
|
* |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income |
|
$ |
36,830 |
|
|
$ |
30,267 |
|
|
$ |
25,732 |
|
|
|
22% |
|
|
|
18% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
5.06 |
|
|
$ |
2.13 |
|
|
$ |
3.25 |
|
|
|
138% |
|
|
|
(34)% |
|
|
Net tax impact of transfer of intangible properties |
|
|
(0.33 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
* |
|
|
|
* |
|
|
Net tax impact of the TCJA |
|
|
0.02 |
|
|
|
1.75 |
|
|
|
0 |
|
|
|
* |
|
|
|
* |
|
|
Restructuring expenses |
|
|
0 |
|
|
|
0 |
|
|
|
0.04 |
|
|
|
* |
|
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted earnings per share |
|
$ |
4.75 |
|
|
$ |
3.88 |
|
|
$ |
3.29 |
|
|
|
22% |
|
|
|
18% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Not meaningful. |
|
(In millions) |
|
|
|
|
|
|
|
|||
|
|
|
|
||
|
Three Months Ending, |
|
|
|
|
|
|
|
|||
|
September 30, 2019 |
|
$ |
12,353 |
|
|
December 31, 2019 |
|
|
9,807 |
|
|
March 31, 2020 |
|
|
6,887 |
|
|
June 30, 2020 |
|
|
3,629 |
|
|
Thereafter |
|
|
4,530 |
|
|
|
|
|||
|
|
|
|||
|
Total |
|
$ |
37,206 |
|
|
|
|
|
|
|
|
(In millions) |
|
2020 |
|
|
2021-2022 |
|
|
2023-2024 |
|
|
Thereafter |
|
|
Total |
|
|||||
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||
|
Long-term debt: (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal payments |
|
$ |
5,518 |
|
|
$ |
11,744 |
|
|
$ |
8,000 |
|
|
$ |
47,519 |
|
|
$ |
72,781 |
|
|
Interest payments |
|
|
2,299 |
|
|
|
4,309 |
|
|
|
3,818 |
|
|
|
29,383 |
|
|
|
39,809 |
|
|
Construction commitments (b) |
|
|
3,443 |
|
|
|
515 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,958 |
|
|
Operating leases, including imputed interest (c) |
|
|
1,790 |
|
|
|
3,144 |
|
|
|
2,413 |
|
|
|
3,645 |
|
|
|
10,992 |
|
|
|
|
797 |
|
|
|
2,008 |
|
|
|
2,165 |
|
|
|
9,872 |
|
|
|
14,842 |
|
|
|
Transition tax (d) |
|
|
1,180 |
|
|
|
2,900 |
|
|
|
4,168 |
|
|
|
8,155 |
|
|
|
16,403 |
|
|
Purchase commitments (e) |
|
|
17,478 |
|
|
|
1,185 |
|
|
|
159 |
|
|
|
339 |
|
|
|
19,161 |
|
|
Other long-term liabilities (f) |
|
|
0 |
|
|
|
72 |
|
|
|
29 |
|
|
|
324 |
|
|
|
425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
32,505 |
|
|
$ |
25,877 |
|
|
$ |
20,752 |
|
|
$ |
99,237 |
|
|
$ |
178,371 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Refer to Note 11 – Debt of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K). |
|
(b) |
Refer to Note 7 – Property and Equipment of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K). |
|
(c) |
Refer to Note 15 – Leases of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K). |
|
(d) |
Refer to Note 12 – Income Taxes of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K). |
|
(e) |
Amounts represent purchase commitments, including open purchase orders and take-or-pay contracts that are not presented as construction commitments above. |
|
(f) |
We have excluded long-term tax contingencies, other tax liabilities, and deferred income taxes of $14.2 billion from the amounts presented as the timing of these obligations is uncertain. We have also excluded unearned revenue and non-cash items. |
|
Satya Nadella |
|
Chief Executive Officer |
|
|
|
Amy E. Hood |
|
Executive Vice President and Chief Financial Officer |
|
|
|
Frank H. Brod |
|
Corporate Vice President, Finance and Administration; |
|
(In millions) |
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
|
Risk Categories |
|
Hypothetical Change |
|
June 30, 2019 |
|
|
|
Impact |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency - Revenue |
|
10% decrease in foreign exchange rates |
|
$ |
(3,402 |
) |
|
|
|
Earnings |
|
|
Foreign currency - Investments |
|
10% decrease in foreign exchange rates |
|
|
(120 |
) |
|
|
|
Fair Value |
|
|
Interest rate |
|
100 basis point increase in U.S. treasury interest rates |
|
|
(2,909 |
) |
|
|
|
Fair Value |
|
|
Credit |
|
100 basis point increase in credit spreads |
|
|
(224 |
) |
|
|
|
Fair Value |
|
|
Equity |
|
10% decrease in equity market prices |
|
|
(244 |
) |
|
|
|
Earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
66,069 |
|
|
$ |
64,497 |
|
|
$ |
63,811 |
|
|
Service and other |
|
|
59,774 |
|
|
|
45,863 |
|
|
|
32,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total revenue |
|
|
125,843 |
|
|
|
110,360 |
|
|
|
96,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
|
16,273 |
|
|
|
15,420 |
|
|
|
15,175 |
|
|
Service and other |
|
|
26,637 |
|
|
|
22,933 |
|
|
|
19,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total cost of revenue |
|
|
42,910 |
|
|
|
38,353 |
|
|
|
34,261 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Gross margin |
|
|
82,933 |
|
|
|
72,007 |
|
|
|
62,310 |
|
|
Research and development |
|
|
16,876 |
|
|
|
14,726 |
|
|
|
13,037 |
|
|
Sales and marketing |
|
|
18,213 |
|
|
|
17,469 |
|
|
|
15,461 |
|
|
General and administrative |
|
|
4,885 |
|
|
|
4,754 |
|
|
|
4,481 |
|
|
Restructuring |
|
|
0 |
|
|
|
0 |
|
|
|
306 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Operating income |
|
|
42,959 |
|
|
|
35,058 |
|
|
|
29,025 |
|
|
Other income, net |
|
|
729 |
|
|
|
1,416 |
|
|
|
876 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Income before income taxes |
|
|
43,688 |
|
|
|
36,474 |
|
|
|
29,901 |
|
|
Provision for income taxes |
|
|
4,448 |
|
|
|
19,903 |
|
|
|
4,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Net income |
|
$ |
39,240 |
|
|
$ |
16,571 |
|
|
$ |
25,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
5.11 |
|
|
$ |
2.15 |
|
|
$ |
3.29 |
|
|
Diluted |
|
$ |
5.06 |
|
|
$ |
2.13 |
|
|
$ |
3.25 |
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|||||||||
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
7,673 |
|
|
|
7,700 |
|
|
|
7,746 |
|
|
Diluted |
|
|
7,753 |
|
|
|
7,794 |
|
|
|
7,832 |
|
|
|
|
|||||||||||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Net income |
|
$ |
39,240 |
|
|
$ |
16,571 |
|
|
$ |
25,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change related to derivatives |
|
|
(173 |
) |
|
|
39 |
|
|
|
(218 |
) |
|
Net change related to investments |
|
|
2,405 |
|
|
|
(2,717 |
) |
|
|
(1,116 |
) |
|
Translation adjustments and other |
|
|
(318 |
) |
|
|
(178 |
) |
|
|
167 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) |
|
|
1,914 |
|
|
|
(2,856 |
) |
|
|
(1,167 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
41,154 |
|
|
$ |
13,715 |
|
|
$ |
24,322 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
||
|
|
|
|||||||
|
|
|
|
|
|||||
|
June 30, |
|
2019 |
|
|
2018 |
|
||
|
|
|
|
||||||
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
11,356 |
|
|
$ |
11,946 |
|
|
Short-term investments |
|
|
122,463 |
|
|
|
121,822 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Total cash, cash equivalents, and short-term investments |
|
|
133,819 |
|
|
|
133,768 |
|
|
Accounts receivable, net of allowance for doubtful accounts of $411 and $377 |
|
|
29,524 |
|
|
|
26,481 |
|
|
Inventories |
|
|
2,063 |
|
|
|
2,662 |
|
|
Other |
|
|
10,146 |
|
|
|
6,751 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total current assets |
|
|
175,552 |
|
|
|
169,662 |
|
|
Property and equipment, net of accumulated depreciation of $35,330 and $29,223 |
|
|
36,477 |
|
|
|
29,460 |
|
|
Operating lease right-of-use assets |
|
|
7,379 |
|
|
|
6,686 |
|
|
Equity investments |
|
|
2,649 |
|
|
|
1,862 |
|
|
Goodwill |
|
|
42,026 |
|
|
|
35,683 |
|
|
Intangible assets, net |
|
|
7,750 |
|
|
|
8,053 |
|
|
Other long-term assets |
|
|
14,723 |
|
|
|
7,442 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total assets |
|
$ |
286,556 |
|
|
$ |
258,848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
9,382 |
|
|
$ |
8,617 |
|
|
Current portion of long-term debt |
|
|
5,516 |
|
|
|
3,998 |
|
|
Accrued compensation |
|
|
6,830 |
|
|
|
6,103 |
|
|
Short-term income taxes |
|
|
5,665 |
|
|
|
2,121 |
|
|
Short-term unearned revenue |
|
|
32,676 |
|
|
|
28,905 |
|
|
Other |
|
|
9,351 |
|
|
|
8,744 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total current liabilities |
|
|
69,420 |
|
|
|
58,488 |
|
|
Long-term debt |
|
|
66,662 |
|
|
|
72,242 |
|
|
Long-term income taxes |
|
|
29,612 |
|
|
|
30,265 |
|
|
Long-term unearned revenue |
|
|
4,530 |
|
|
|
3,815 |
|
|
Deferred income taxes |
|
|
233 |
|
|
|
541 |
|
|
Operating lease liabilities |
|
|
6,188 |
|
|
|
5,568 |
|
|
Other long-term liabilities |
|
|
7,581 |
|
|
|
5,211 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total liabilities |
|
|
184,226 |
|
|
|
176,130 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
Common stock and paid-in capital – shares authorized 24,000; outstanding 7,643 and 7,677 |
|
|
78,520 |
|
|
|
71,223 |
|
|
Retained earnings |
|
|
24,150 |
|
|
|
13,682 |
|
|
Accumulated other comprehensive loss |
|
|
(340 |
) |
|
|
(2,187 |
) |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total stockholders’ equity |
|
|
102,330 |
|
|
|
82,718 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total liabilities and stockholders’ equity |
|
$ |
286,556 |
|
|
$ |
258,848 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
39,240 |
|
|
$ |
16,571 |
|
|
$ |
25,489 |
|
|
Adjustments to reconcile net income to net cash from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, amortization, and other |
|
|
11,682 |
|
|
|
10,261 |
|
|
|
8,778 |
|
|
Stock-based compensation expense |
|
|
4,652 |
|
|
|
3,940 |
|
|
|
3,266 |
|
|
Net recognized gains on investments and derivatives |
|
|
(792 |
) |
|
|
(2,212 |
) |
|
|
(2,073 |
) |
|
Deferred income taxes |
|
|
(6,463 |
) |
|
|
(5,143 |
) |
|
|
(829 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(2,812 |
) |
|
|
(3,862 |
) |
|
|
(1,216 |
) |
|
Inventories |
|
|
597 |
|
|
|
(465 |
) |
|
|
50 |
|
|
Other current assets |
|
|
(1,718 |
) |
|
|
(952 |
) |
|
|
1,028 |
|
|
Other long-term assets |
|
|
(1,834 |
) |
|
|
(285 |
) |
|
|
(917 |
) |
|
Accounts payable |
|
|
232 |
|
|
|
1,148 |
|
|
|
81 |
|
|
Unearned revenue |
|
|
4,462 |
|
|
|
5,922 |
|
|
|
3,820 |
|
|
Income taxes |
|
|
2,929 |
|
|
|
18,183 |
|
|
|
1,792 |
|
|
Other current liabilities |
|
|
1,419 |
|
|
|
798 |
|
|
|
356 |
|
|
Other long-term liabilities |
|
|
591 |
|
|
|
(20 |
) |
|
|
(118 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from operations |
|
|
52,185 |
|
|
|
43,884 |
|
|
|
39,507 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments of short-term debt, maturities of 90 days or less, net |
|
|
0 |
|
|
|
(7,324 |
) |
|
|
(4,963 |
) |
|
Proceeds from issuance of debt |
|
|
0 |
|
|
|
7,183 |
|
|
|
44,344 |
|
|
Repayments of debt |
|
|
(4,000 |
) |
|
|
(10,060 |
) |
|
|
(7,922 |
) |
|
Common stock issued |
|
|
1,142 |
|
|
|
1,002 |
|
|
|
772 |
|
|
Common stock repurchased |
|
|
(19,543 |
) |
|
|
(10,721 |
) |
|
|
(11,788 |
) |
|
Common stock cash dividends paid |
|
|
(13,811 |
) |
|
|
(12,699 |
) |
|
|
(11,845 |
) |
|
Other, net |
|
|
(675 |
) |
|
|
(971 |
) |
|
|
(190 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from (used in) financing |
|
|
(36,887 |
) |
|
|
(33,590 |
) |
|
|
8,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing |
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property and equipment |
|
|
(13,925 |
) |
|
|
(11,632 |
) |
|
|
(8,129 |
) |
|
Acquisition of companies, net of cash acquired, and purchases of intangible and other assets |
|
|
(2,388 |
) |
|
|
(888 |
) |
|
|
(25,944 |
) |
|
Purchases of investments |
|
|
(57,697 |
) |
|
|
(137,380 |
) |
|
|
(176,905 |
) |
|
Maturities of investments |
|
|
20,043 |
|
|
|
26,360 |
|
|
|
28,044 |
|
|
Sales of investments |
|
|
38,194 |
|
|
|
117,577 |
|
|
|
136,350 |
|
|
Securities lending payable |
|
|
0 |
|
|
|
(98 |
) |
|
|
(197 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing |
|
|
(15,773 |
) |
|
|
(6,061 |
) |
|
|
(46,781 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rates on cash and cash equivalents |
|
|
(115 |
) |
|
|
50 |
|
|
|
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
|
(590 |
) |
|
|
4,283 |
|
|
|
1,153 |
|
|
Cash and cash equivalents, beginning of period |
|
|
11,946 |
|
|
|
7,663 |
|
|
|
6,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
11,356 |
|
|
$ |
11,946 |
|
|
$ |
7,663 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|||||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Common stock and paid-in capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
$ |
71,223 |
|
|
$ |
69,315 |
|
|
$ |
68,178 |
|
|
Common stock issued |
|
|
6,829 |
|
|
|
1,002 |
|
|
|
772 |
|
|
Common stock repurchased |
|
|
(4,195 |
) |
|
|
(3,033 |
) |
|
|
(2,987 |
) |
|
Stock-based compensation expense |
|
|
4,652 |
|
|
|
3,940 |
|
|
|
3,266 |
|
|
Other, net |
|
|
11 |
|
|
|
(1 |
) |
|
|
86 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance, end of period |
|
|
78,520 |
|
|
|
71,223 |
|
|
|
69,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Retained earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
13,682 |
|
|
|
17,769 |
|
|
|
13,118 |
|
|
Net income |
|
|
39,240 |
|
|
|
16,571 |
|
|
|
25,489 |
|
|
Common stock cash dividends |
|
|
(14,103 |
) |
|
|
(12,917 |
) |
|
|
(12,040 |
) |
|
Common stock repurchased |
|
|
(15,346 |
) |
|
|
(7,699 |
) |
|
|
(8,798 |
) |
|
Cumulative effect of accounting changes |
|
|
677 |
|
|
|
(42 |
) |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance, end of period |
|
|
24,150 |
|
|
|
13,682 |
|
|
|
17,769 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Accumulated other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
(2,187 |
) |
|
|
627 |
|
|
|
1,794 |
|
|
Other comprehensive income (loss) |
|
|
1,914 |
|
|
|
(2,856 |
) |
|
|
(1,167 |
) |
|
Cumulative effect of accounting changes |
|
|
(67 |
) |
|
|
42 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance, end of period |
|
|
(340 |
) |
|
|
(2,187 |
) |
|
|
627 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total stockholders’ equity |
|
$ |
102,330 |
|
|
$ |
82,718 |
|
|
$ |
87,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per common share |
|
$ |
1.84 |
|
|
$ |
1.68 |
|
|
$ |
1.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
||||||||||||
|
|
|
|
|||||||||||
|
|
|
|
|||||||||||
|
Year Ended June 30, |
|
|
2019 |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance, beginning of period |
|
$ |
397 |
|
|
|
$ |
361 |
|
|
$ |
409 |
|
|
Charged to costs and other |
|
|
153 |
|
|
|
|
134 |
|
|
|
58 |
|
|
Write-offs |
|
|
(116 |
) |
|
|
|
(98 |
) |
|
|
(106 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period |
|
$ |
434 |
|
|
|
$ |
397 |
|
|
$ |
361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Accounts receivable, net of allowance for doubtful accounts |
|
$ |
411 |
|
|
$ |
377 |
|
|
$ |
345 |
|
|
Other long-term assets |
|
|
23 |
|
|
|
20 |
|
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
434 |
|
|
$ |
397 |
|
|
$ |
361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• |
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets. Our Level 1 investments include U.S. government securities, common and preferred stock, and mutual funds. Our Level 1 derivative assets and liabilities include those actively traded on exchanges. |
|
|
• |
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit spreads, foreign exchange rates, and forward and spot prices for currencies. Our Level 2 investments include commercial paper, certificates of deposit, U.S. agency securities, foreign government bonds, mortgage- and asset-backed securities, corporate notes and bonds, and municipal securities. Our Level 2 derivative assets and liabilities primarily include certain over-the-counter option and swap contracts. |
|
|
• |
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Our Level 3 assets and liabilities include investments in corporate notes and bonds, and goodwill and intangible assets, when they are recorded at fair value due to an impairment charge. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities. |
|
(In millions, except earnings per share) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available for common shareholders (A) |
|
$ |
39,240 |
|
|
$ |
16,571 |
|
|
$ |
25,489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average outstanding shares of common stock (B) |
|
|
7,673 |
|
|
|
7,700 |
|
|
|
7,746 |
|
|
Dilutive effect of stock-based awards |
|
|
80 |
|
|
|
94 |
|
|
|
86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and common stock equivalents (C) |
|
|
7,753 |
|
|
|
7,794 |
|
|
|
7,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (A/B) |
|
$ |
5.11 |
|
|
$ |
2.15 |
|
|
$ |
3.29 |
|
|
Diluted (A/C) |
|
$ |
5.06 |
|
|
$ |
2.13 |
|
|
$ |
3.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|||||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Interest and dividends income |
|
$ |
2,762 |
|
|
$ |
2,214 |
|
|
$ |
1,387 |
|
|
Interest expense |
|
|
(2,686 |
) |
|
|
(2,733 |
) |
|
|
(2,222 |
) |
|
Net recognized gains on investments |
|
|
648 |
|
|
|
2,399 |
|
|
|
2,583 |
|
|
Net gains (losses) on derivatives |
|
|
144 |
|
|
|
(187 |
) |
|
|
(510 |
) |
|
Net losses on foreign currency remeasurements |
|
|
(82 |
) |
|
|
(218 |
) |
|
|
(111 |
) |
|
Other, net |
|
|
(57 |
) |
|
|
(59 |
) |
|
|
(251 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
729 |
|
|
$ |
1,416 |
|
|
$ |
876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Realized gains from sales of available-for-sale securities |
|
$ |
12 |
|
|
$ |
27 |
|
|
$ |
108 |
|
|
Realized losses from sales of available-for-sale securities |
|
|
(93 |
) |
|
|
(987 |
) |
|
|
(162 |
) |
|
Other-than-temporary impairments of investments |
|
|
(16 |
) |
|
|
(6 |
) |
|
|
(14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
(97 |
) |
|
$ |
(966 |
) |
|
$ |
(68 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Net realized gains on investments sold |
|
$ |
276 |
|
|
$ |
3,406 |
|
|
$ |
2,692 |
|
|
Net unrealized gains on investments still held |
|
|
479 |
|
|
|
0 |
|
|
|
0 |
|
|
Impairments of investments |
|
|
(10 |
) |
|
|
(41 |
) |
|
|
(41 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
745 |
|
|
$ |
3,365 |
|
|
$ |
2,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
Fair Value Level |
|
|
Cost Basis |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Recorded Basis |
|
|
Cash and Cash Equivalents |
|
Short-term Investments |
|
|
Equity Investments |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in Fair Value Recorded in Other Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial paper |
|
|
Level 2 |
|
|
$ |
2,211 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
2,211 |
|
|
$ |
1,773 |
|
|
$ |
438 |
|
|
$ |
0 |
|
|
Certificates of deposit |
|
|
Level 2 |
|
|
|
2,018 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,018 |
|
|
|
1,430 |
|
|
|
588 |
|
|
|
0 |
|
|
U.S. government securities |
|
|
Level 1 |
|
|
|
104,925 |
|
|
|
1,854 |
|
|
|
(104 |
) |
|
|
106,675 |
|
|
|
769 |
|
|
|
105,906 |
|
|
|
0 |
|
|
U.S. agency securities |
|
|
Level 2 |
|
|
|
988 |
|
|
|
0 |
|
|
|
0 |
|
|
|
988 |
|
|
|
698 |
|
|
|
290 |
|
|
|
0 |
|
|
Foreign government bonds |
|
|
Level 2 |
|
|
|
6,350 |
|
|
|
4 |
|
|
|
(8 |
) |
|
|
6,346 |
|
|
|
2,506 |
|
|
|
3,840 |
|
|
|
0 |
|
|
Mortgage- and asset-backed securities |
|
|
Level 2 |
|
|
|
3,554 |
|
|
|
10 |
|
|
|
(3 |
) |
|
|
3,561 |
|
|
|
0 |
|
|
|
3,561 |
|
|
|
0 |
|
|
Corporate notes and bonds |
|
|
Level 2 |
|
|
|
7,437 |
|
|
|
111 |
|
|
|
(7 |
) |
|
|
7,541 |
|
|
|
0 |
|
|
|
7,541 |
|
|
|
0 |
|
|
Corporate notes and bonds |
|
|
Level 3 |
|
|
|
15 |
|
|
|
0 |
|
|
|
0 |
|
|
|
15 |
|
|
|
0 |
|
|
|
15 |
|
|
|
0 |
|
|
Municipal securities |
|
|
Level 2 |
|
|
|
242 |
|
|
|
48 |
|
|
|
0 |
|
|
|
290 |
|
|
|
0 |
|
|
|
290 |
|
|
|
0 |
|
|
Municipal securities |
|
|
Level 3 |
|
|
|
7 |
|
|
|
0 |
|
|
|
0 |
|
|
|
7 |
|
|
|
0 |
|
|
|
7 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt investments |
|
|
|
|
|
$ |
127,747 |
|
|
$ |
2,027 |
|
|
$ |
(122 |
) |
|
$ |
129,652 |
|
|
$ |
7,176 |
|
|
$ |
122,476 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in Fair Value Recorded in Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity investments |
|
|
Level 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
973 |
|
|
$ |
409 |
|
|
$ |
0 |
|
|
$ |
564 |
|
|
Equity investments |
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,085 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,058 |
|
|
$ |
409 |
|
|
$ |
0 |
|
|
$ |
2,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,771 |
|
|
$ |
3,771 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
Derivatives, net (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13 |
) |
|
|
0 |
|
|
|
(13 |
) |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
136,468 |
|
|
$ |
11,356 |
|
|
$ |
122,463 |
|
|
$ |
2,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
Fair Value Level |
|
|
Cost Basis |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Recorded Basis |
|
|
Cash and Cash Equivalents |
|
|
Short-term Investments |
|
|
Equity Investments |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in Fair Value Recorded in Other Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial paper |
|
|
Level 2 |
|
|
$ |
2,513 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
2,513 |
|
|
$ |
2,215 |
|
|
$ |
298 |
|
|
$ |
0 |
|
|
Certificates of deposit |
|
|
Level 2 |
|
|
|
2,058 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,058 |
|
|
|
1,865 |
|
|
|
193 |
|
|
|
0 |
|
|
U.S. government securities |
|
|
Level 1 |
|
|
|
108,120 |
|
|
|
62 |
|
|
|
(1,167 |
) |
|
|
107,015 |
|
|
|
2,280 |
|
|
|
104,735 |
|
|
|
0 |
|
|
U.S. agency securities |
|
|
Level 2 |
|
|
|
1,742 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,742 |
|
|
|
1,398 |
|
|
|
344 |
|
|
|
0 |
|
|
Foreign government bonds |
|
|
Level 1 |
|
|
|
22 |
|
|
|
0 |
|
|
|
0 |
|
|
|
22 |
|
|
|
0 |
|
|
|
22 |
|
|
|
0 |
|
|
Foreign government bonds |
|
|
Level 2 |
|
|
|
5,063 |
|
|
|
1 |
|
|
|
(10 |
) |
|
|
5,054 |
|
|
|
0 |
|
|
|
5,054 |
|
|
|
0 |
|
|
Mortgage- and asset-backed securities |
|
|
Level 2 |
|
|
|
3,864 |
|
|
|
4 |
|
|
|
(13 |
) |
|
|
3,855 |
|
|
|
0 |
|
|
|
3,855 |
|
|
|
0 |
|
|
Corporate notes and bonds |
|
|
Level 2 |
|
|
|
6,929 |
|
|
|
21 |
|
|
|
(56 |
) |
|
|
6,894 |
|
|
|
0 |
|
|
|
6,894 |
|
|
|
0 |
|
|
Corporate notes and bonds |
|
|
Level 3 |
|
|
|
15 |
|
|
|
0 |
|
|
|
0 |
|
|
|
15 |
|
|
|
0 |
|
|
|
15 |
|
|
|
0 |
|
|
Municipal securities |
|
|
Level 2 |
|
|
|
271 |
|
|
|
37 |
|
|
|
(1 |
) |
|
|
307 |
|
|
|
0 |
|
|
|
307 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt investments |
|
|
|
|
|
$ |
130,597 |
|
|
$ |
125 |
|
|
$ |
(1,247 |
) |
|
$ |
129,475 |
|
|
$ |
7,758 |
|
|
$ |
121,717 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity investments |
|
|
Level 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
533 |
|
|
$ |
246 |
|
|
$ |
0 |
|
|
$ |
287 |
|
|
Equity investments |
|
|
Level 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18 |
|
|
|
0 |
|
|
|
0 |
|
|
|
18 |
|
|
Equity investments |
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,558 |
|
|
|
0 |
|
|
|
1 |
|
|
|
1,557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,109 |
|
|
$ |
246 |
|
|
$ |
1 |
|
|
$ |
1,862 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,942 |
|
|
$ |
3,942 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
Derivatives, net (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104 |
|
|
|
0 |
|
|
|
104 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
135,630 |
|
|
$ |
11,946 |
|
|
$ |
121,822 |
|
|
$ |
1,862 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Refer to Note 5 – Derivatives for further information on the fair value of our derivative instruments. |
|
|
|
Less than 12 Months |
|
|
12 Months or Greater |
|
|
|
|
|
Total |
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
(In millions) |
|
Fair Value |
|
|
Unrealized |
|
|
Fair Value |
|
|
Unrealized |
|
|
Total |
|
|
||||||||
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
U.S. government and agency securities |
|
$ |
1,491 |
|
|
$ |
(1 |
) |
|
$ |
39,158 |
|
|
$ |
(103 |
) |
|
$ |
40,649 |
|
|
$ |
(104 |
) |
|
Foreign government bonds |
|
|
25 |
|
|
|
0 |
|
|
|
77 |
|
|
|
(8 |
) |
|
|
102 |
|
|
|
(8 |
) |
|
Mortgage- and asset-backed securities |
|
|
664 |
|
|
|
(1 |
) |
|
|
378 |
|
|
|
(2 |
) |
|
|
1,042 |
|
|
|
(3 |
) |
|
Corporate notes and bonds |
|
|
498 |
|
|
|
(3 |
) |
|
|
376 |
|
|
|
(4 |
) |
|
|
874 |
|
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
2,678 |
|
|
$ |
(5 |
) |
|
$ |
39,989 |
|
|
$ |
(117 |
) |
|
$ |
42,667 |
|
|
$ |
(122 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 Months |
|
|
12 Months or Greater |
|
|
|
|
|
|
Total Unrealized Losses |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(In millions) |
|
Fair Value |
|
|
Unrealized Losses |
|
|
Fair Value |
|
|
Unrealized Losses |
|
|
Total Fair Value |
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency securities |
|
$ |
82,352 |
|
|
$ |
(1,064 |
) |
|
$ |
4,459 |
|
|
$ |
(103 |
) |
|
$ |
86,811 |
|
|
$ |
(1,167 |
) |
|
Foreign government bonds |
|
|
3,457 |
|
|
|
(7 |
) |
|
|
13 |
|
|
|
(3 |
) |
|
|
3,470 |
|
|
|
(10 |
) |
|
Mortgage- and asset-backed securities |
|
|
2,072 |
|
|
|
(9 |
) |
|
|
96 |
|
|
|
(4 |
) |
|
|
2,168 |
|
|
|
(13 |
) |
|
Corporate notes and bonds |
|
|
3,111 |
|
|
|
(43 |
) |
|
|
301 |
|
|
|
(13 |
) |
|
|
3,412 |
|
|
|
(56 |
) |
|
Municipal securities |
|
|
45 |
|
|
|
(1 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
45 |
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
91,037 |
|
|
$ |
(1,124 |
) |
|
$ |
4,869 |
|
|
$ |
(123 |
) |
|
$ |
95,906 |
|
|
$ |
(1,247 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
Cost Basis |
|
|
Estimated Fair Value |
|
||
|
|
|
|||||||
|
|
|
|
|
|||||
|
June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Due in one year or less |
|
$ |
53,200 |
|
|
$ |
53,124 |
|
|
Due after one year through five years |
|
|
47,016 |
|
|
|
47,783 |
|
|
Due after five years through 10 years |
|
|
26,658 |
|
|
|
27,824 |
|
|
Due after 10 years |
|
|
873 |
|
|
|
921 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
127,747 |
|
|
$ |
129,652 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
June 30, 2019 |
|
|
June 30, 2018 |
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Designated as Hedging Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Foreign exchange contracts sold |
|
$ |
6,034 |
|
|
$ |
11,101 |
|
|
|
|
|
||||||
|
Not Designated as Hedging Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Foreign exchange contracts purchased |
|
|
14,889 |
|
|
|
9,425 |
|
|
Foreign exchange contracts sold |
|
|
15,614 |
|
|
|
13,374 |
|
|
Equity contracts purchased |
|
|
680 |
|
|
|
49 |
|
|
Equity contracts sold |
|
|
5 |
|
|
|
5 |
|
|
Other contracts purchased |
|
|
1,327 |
|
|
|
878 |
|
|
Other contracts sold |
|
|
451 |
|
|
|
472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative |
|
Derivative |
|
Derivative |
|
Derivative |
|
|||||||
|
(In millions) |
|
Assets |
|
Liabilities |
|
Assets |
|
Liabilities |
|
|||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019 |
|
June 30, 2018 |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in Fair Value Recorded in Other Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Designated as Hedging Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
174 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in Fair Value Recorded in Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Designated as Hedging Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
|
0 |
|
|
|
(93 |
) |
|
|
95 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not Designated as Hedging Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
|
204 |
|
|
|
(172 |
) |
|
|
256 |
|
|
|
(197 |
) |
|
Equity contracts |
|
|
38 |
|
|
|
0 |
|
|
|
2 |
|
|
|
(7 |
) |
|
Other contracts |
|
|
8 |
|
|
|
(7 |
) |
|
|
11 |
|
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amounts of derivatives |
|
|
250 |
|
|
|
(272 |
) |
|
|
538 |
|
|
|
(207 |
) |
|
Gross amounts of derivatives offset in the balance sheet |
|
|
(113 |
) |
|
|
114 |
|
|
|
(152 |
) |
|
|
153 |
|
|
Cash collateral received |
|
|
0 |
|
|
|
(78 |
) |
|
|
0 |
|
|
|
(235 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net amounts of derivatives |
|
$ |
137 |
|
|
$ |
(236 |
) |
|
$ |
386 |
|
|
$ |
(289 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported as |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments |
|
$ |
(13 |
) |
|
$ |
0 |
|
|
$ |
104 |
|
|
$ |
0 |
|
|
Other current assets |
|
|
146 |
|
|
|
0 |
|
|
|
260 |
|
|
|
0 |
|
|
Other long-term assets |
|
|
4 |
|
|
|
0 |
|
|
|
22 |
|
|
|
0 |
|
|
Other current liabilities |
|
|
0 |
|
|
|
(221 |
) |
|
|
0 |
|
|
|
(288 |
) |
|
Other long-term liabilities |
|
|
0 |
|
|
|
(15 |
) |
|
|
0 |
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
137 |
|
|
$ |
(236 |
) |
|
$ |
386 |
|
|
$ |
(289 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
Level 1 |
|
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets |
|
$ |
0 |
|
|
$ |
247 |
|
|
$ |
3 |
|
|
$ |
250 |
|
|
Derivative liabilities |
|
|
0 |
|
|
|
(272 |
) |
|
|
0 |
|
|
|
(272 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets |
|
|
1 |
|
|
|
535 |
|
|
|
2 |
|
|
|
538 |
|
|
Derivative liabilities |
|
|
(1 |
) |
|
|
(206 |
) |
|
|
0 |
|
|
|
(207 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Foreign Exchange Contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Derivatives |
|
$ |
38 |
|
|
$ |
25 |
|
|
$ |
441 |
|
|
Hedged items |
|
|
130 |
|
|
|
78 |
|
|
|
(386 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amount of ineffectiveness |
|
$ |
168 |
|
|
$ |
103 |
|
|
$ |
55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Equity Contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Derivatives |
|
$ |
0 |
|
|
$ |
(324 |
) |
|
$ |
(74 |
) |
|
Hedged items |
|
|
0 |
|
|
|
324 |
|
|
|
74 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total amount of ineffectiveness |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of equity contracts excluded from effectiveness assessment |
|
$ |
0 |
|
|
$ |
80 |
|
|
$ |
(80 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Effective Portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Gains recognized in other comprehensive income (loss), net of tax of $1, $11, and $4 |
|
$ |
159 |
|
|
$ |
219 |
|
|
$ |
328 |
|
|
Gains reclassified from accumulated other comprehensive income (loss) into revenue |
|
|
341 |
|
|
|
185 |
|
|
|
555 |
|
|
|
|
|
|
|||||||||
|
Amount Excluded from Effectiveness Assessment and Ineffective Portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Losses recognized in other income (expense), net |
|
|
(64 |
) |
|
|
(255 |
) |
|
|
(389 |
) |
|
|
|
|||||||||||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Foreign exchange contracts |
|
$ |
(97 |
) |
|
$ |
(33 |
) |
|
$ |
(117 |
) |
|
Equity contracts |
|
|
3 |
|
|
|
(87 |
) |
|
|
(114 |
) |
|
Other contracts |
|
|
35 |
|
|
|
(17 |
) |
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
(59 |
) |
|
$ |
(137 |
) |
|
$ |
(234 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|||||||
|
|
|
|||||||
|
|
|
|
|
|||||
|
June 30, |
|
2019 |
|
|
2018 |
|
||
|
|
|
|
||||||
|
Raw materials |
|
$ |
399 |
|
|
$ |
655 |
|
|
Work in process |
|
|
53 |
|
|
|
54 |
|
|
Finished goods |
|
|
1,611 |
|
|
|
1,953 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
2,063 |
|
|
$ |
2,662 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|||||||
|
|
|
|||||||
|
|
|
|
|
|||||
|
June 30, |
|
2019 |
|
|
2018 |
|
||
|
|
|
|
||||||
|
Land |
|
$ |
1,540 |
|
|
$ |
1,254 |
|
|
Buildings and improvements |
|
|
26,288 |
|
|
|
20,604 |
|
|
Leasehold improvements |
|
|
5,316 |
|
|
|
4,735 |
|
|
Computer equipment and software |
|
|
33,823 |
|
|
|
27,633 |
|
|
Furniture and equipment |
|
|
4,840 |
|
|
|
4,457 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total, at cost |
|
|
71,807 |
|
|
|
58,683 |
|
|
Accumulated depreciation |
|
|
(35,330 |
) |
|
|
(29,223 |
) |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total, net |
|
$ |
36,477 |
|
|
$ |
29,460 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|||
|
|
|
|
||
|
|
|
|
|
|
|
Cash, cash equivalents, and short-term investments |
|
$ |
234 |
|
|
Goodwill |
|
|
5,497 |
|
|
Intangible assets |
|
|
1,267 |
|
|
Other assets |
|
|
143 |
|
|
Other liabilities |
|
|
(217 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
6,924 |
|
|
|
|
|
|
|
|
(In millions) |
|
Amount |
|
|
Weighted Average Life |
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Customer-related |
|
$ |
648 |
|
|
|
8 years |
|
|
Technology-based |
|
|
447 |
|
|
|
5 years |
|
|
Marketing-related |
|
|
170 |
|
|
|
10 years |
|
|
Contract-based |
|
|
2 |
|
|
|
2 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,267 |
|
|
|
7 years |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|||
|
|
|
|
||
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,328 |
|
|
Short-term investments |
|
|
2,110 |
|
|
Other current assets |
|
|
697 |
|
|
Property and equipment |
|
|
1,529 |
|
|
Intangible assets |
|
|
7,887 |
|
|
Goodwill (a) |
|
|
16,803 |
|
|
Short-term debt (b) |
|
|
(1,323 |
) |
|
Other current liabilities |
|
|
(1,117 |
) |
|
Deferred income taxes |
|
|
(774 |
) |
|
Other |
|
|
(131 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchase price |
|
$ |
27,009 |
|
|
|
|
|
|
|
|
(a) |
Goodwill was assigned to our Productivity and Business Processes segment. The goodwill was primarily attributed to increased synergies that are expected to be achieved from the integration of LinkedIn. None of the goodwill is expected to be deductible for income tax purposes. |
|
(b) |
Convertible senior notes issued by LinkedIn on November 12, 2014, substantially all of which were redeemed after our acquisition of LinkedIn. The remaining $18 million of notes are not redeemable and are included in long-term debt in our consolidated balance sheets. Refer to Note 11 – Debt for further information. |
|
(In millions) |
|
Amount |
|
|
Weighted Average Life |
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Customer-related |
|
$ |
3,607 |
|
|
|
7 years |
|
|
Marketing-related (trade names) |
|
|
2,148 |
|
|
|
20 years |
|
|
Technology-based |
|
|
2,109 |
|
|
|
3 years |
|
|
Contract-based |
|
|
23 |
|
|
|
5 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of intangible assets acquired |
|
$ |
7,887 |
|
|
|
9 years |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30, |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
$ |
2,271 |
|
|
Operating loss |
|
|
|
(924 |
) |
|
|
|
|
|
|
|
|
(In millions, except per share amounts) |
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
98,291 |
|
|
$ |
94,490 |
|
|
Net income |
|
|
25,179 |
|
|
|
19,128 |
|
|
Diluted earnings per share |
|
|
3.21 |
|
|
|
2.38 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
June 30, 2017 |
|
Acquisitions |
|
Other |
|
June 30, 2018 |
|
Acquisitions |
|
Other |
|
June 30, |
|
||||||||||||||
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
Productivity and Business Processes |
|
|
$ |
23,739 |
|
|
$ |
72 |
|
|
$ |
12 |
|
|
$ |
23,823 |
|
|
$ |
514 |
|
|
$ |
(60 |
) |
|
$ |
24,277 |
|
|
Intelligent Cloud |
|
|
|
5,555 |
|
|
|
164 |
|
|
|
(16 |
) |
|
|
5,703 |
|
|
|
5,605 |
(a) |
|
|
43 |
(a) |
|
|
11,351 |
|
|
More Personal Computing |
|
|
|
5,828 |
|
|
|
394 |
|
|
|
(65 |
) |
|
|
6,157 |
|
|
|
289 |
|
|
|
(48 |
) |
|
|
6,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
$ |
35,122 |
|
|
$ |
630 |
|
|
$ |
(69 |
) |
|
$ |
35,683 |
|
|
$ |
6,408 |
|
|
$ |
(65 |
) |
|
$ |
42,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Includes goodwill of $5.5 billion related to GitHub. See Note 8 – Business Combinations for further information. |
|
(In millions) |
|
Gross |
|
|
Accumulated |
|
|
Net Carrying |
|
|
Gross |
|
|
Accumulated |
|
|
Net Carrying |
|
||||||
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
June 30, |
|
|
|
|
|
|
|
2019 |
|
|
|
|
|
|
|
|
2018 |
|
||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Technology-based |
|
$ |
7,691 |
|
|
$ |
(5,771 |
) |
|
$ |
1,920 |
|
|
$ |
7,220 |
|
|
$ |
(5,018 |
) |
|
$ |
2,202 |
|
|
Customer-related |
|
|
4,709 |
|
|
|
(1,785 |
) |
|
|
2,924 |
|
|
|
4,031 |
|
|
|
(1,205 |
) |
|
|
2,826 |
|
|
Marketing-related |
|
|
4,165 |
|
|
|
(1,327 |
) |
|
|
2,838 |
|
|
|
4,006 |
|
|
|
(1,071 |
) |
|
|
2,935 |
|
|
Contract-based |
|
|
574 |
|
|
|
(506 |
) |
|
|
68 |
|
|
|
679 |
|
|
|
(589 |
) |
|
|
90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
17,139 |
(a) |
|
$ |
(9,389 |
) |
|
$ |
7,750 |
|
|
$ |
15,936 |
|
|
$ |
(7,883 |
) |
|
$ |
8,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Includes intangible assets of $1.3 billion related to GitHub. See Note 8 – Business Combinations for further information. |
|
(In millions) |
|
Amount |
|
|
Weighted Average Life |
|
|
Amount |
|
|
Weighted Average Life |
|
||||
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|||||||||||
|
Year Ended June 30, |
|
2019 |
|
|
|
|
|
2018 |
|
|
|
|
||||
|
|
|
|
|
|
||||||||||||
|
Technology-based |
|
$ |
814 |
|
|
|
5 years |
|
|
$ |
178 |
|
|
|
4 years |
|
|
Marketing-related |
|
|
177 |
|
|
|
10 years |
|
|
|
14 |
|
|
|
5 years |
|
|
Contract-based |
|
|
7 |
|
|
|
3 years |
|
|
|
14 |
|
|
|
4 years |
|
|
Customer-related |
|
|
710 |
|
|
|
8 years |
|
|
|
13 |
|
|
|
5 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,708 |
|
|
|
7 years |
|
|
$ |
219 |
|
|
|
5 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|||
|
|
|
|
||
|
Year Ending June 30, |
|
|
|
|
|
|
|
|||
|
2020 |
|
$ |
1,488 |
|
|
2021 |
|
|
1,282 |
|
|
2022 |
|
|
1,187 |
|
|
2023 |
|
|
1,053 |
|
|
2024 |
|
|
737 |
|
|
Thereafter |
|
|
2,003 |
|
|
|
|
|||
|
|
|
|
|
|
|
Total |
|
$ |
7,750 |
|
|
|
|
|
|
|
|
(In millions, except interest rates) |
|
Face Value 2019 |
|
|
Face Value 2018 |
|
|
|
Stated Interest Rate |
|
|
|
Effective Interest Rate |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 3, 2018 |
|
$ |
0 |
|
|
$ |
1,750 |
|
|
|
1.300% |
|
|
|
1.396% |
|
|
December 6, 2018 |
|
|
0 |
|
|
|
1,250 |
|
|
|
1.625% |
|
|
|
1.824% |
|
|
June 1, 2019 |
|
|
0 |
|
|
|
1,000 |
|
|
|
4.200% |
|
|
|
4.379% |
|
|
August 8, 2019 |
|
|
2,500 |
|
|
|
2,500 |
|
|
|
1.100% |
|
|
|
1.203% |
|
|
November 1, 2019 |
|
|
18 |
|
|
|
18 |
|
|
|
0.500% |
|
|
|
0.500% |
|
|
February 6, 2020 |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
1.850% |
|
|
|
1.952% |
|
|
February 12, 2020 |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
1.850% |
|
|
|
1.935% |
|
|
October 1, 2020 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
3.000% |
|
|
|
3.137% |
|
|
November 3, 2020 |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
2.000% |
|
|
|
2.093% |
|
|
February 8, 2021 |
|
|
500 |
|
|
|
500 |
|
|
|
4.000% |
|
|
|
4.082% |
|
|
August 8, 2021 |
|
|
2,750 |
|
|
|
2,750 |
|
|
|
1.550% |
|
|
|
1.642% |
|
|
December 6, 2021 (a) |
|
|
1,994 |
|
|
|
2,044 |
|
|
|
2.125% |
|
|
|
2.233% |
|
|
February 6, 2022 |
|
|
1,750 |
|
|
|
1,750 |
|
|
|
2.400% |
|
|
|
2.520% |
|
|
February 12, 2022 |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
2.375% |
|
|
|
2.466% |
|
|
November 3, 2022 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
2.650% |
|
|
|
2.717% |
|
|
November 15, 2022 |
|
|
750 |
|
|
|
750 |
|
|
|
2.125% |
|
|
|
2.239% |
|
|
May 1, 2023 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
2.375% |
|
|
|
2.465% |
|
|
August 8, 2023 |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
2.000% |
|
|
|
2.101% |
|
|
December 15, 2023 |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
3.625% |
|
|
|
3.726% |
|
|
February 6, 2024 |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
2.875% |
|
|
|
3.041% |
|
|
February 12, 2025 |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
2.700% |
|
|
|
2.772% |
|
|
November 3, 2025 |
|
|
3,000 |
|
|
|
3,000 |
|
|
|
3.125% |
|
|
|
3.176% |
|
|
August 8, 2026 |
|
|
4,000 |
|
|
|
4,000 |
|
|
|
2.400% |
|
|
|
2.464% |
|
|
February 6, 2027 |
|
|
4,000 |
|
|
|
4,000 |
|
|
|
3.300% |
|
|
|
3.383% |
|
|
December 6, 2028 (a) |
|
|
1,993 |
|
|
|
2,044 |
|
|
|
3.125% |
|
|
|
3.218% |
|
|
May 2, 2033 (a) |
|
|
626 |
|
|
|
642 |
|
|
|
2.625% |
|
|
|
2.690% |
|
|
February 12, 2035 |
|
|
1,500 |
|
|
|
1,500 |
|
|
|
3.500% |
|
|
|
3.604% |
|
|
November 3, 2035 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
4.200% |
|
|
|
4.260% |
|
|
August 8, 2036 |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
3.450% |
|
|
|
3.510% |
|
|
February 6, 2037 |
|
|
2,500 |
|
|
|
2,500 |
|
|
|
4.100% |
|
|
|
4.152% |
|
|
June 1, 2039 |
|
|
750 |
|
|
|
750 |
|
|
|
5.200% |
|
|
|
5.240% |
|
|
October 1, 2040 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
4.500% |
|
|
|
4.567% |
|
|
February 8, 2041 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
5.300% |
|
|
|
5.361% |
|
|
November 15, 2042 |
|
|
900 |
|
|
|
900 |
|
|
|
3.500% |
|
|
|
3.571% |
|
|
May 1, 2043 |
|
|
500 |
|
|
|
500 |
|
|
|
3.750% |
|
|
|
3.829% |
|
|
December 15, 2043 |
|
|
500 |
|
|
|
500 |
|
|
|
4.875% |
|
|
|
4.918% |
|
|
February 12, 2045 |
|
|
1,750 |
|
|
|
1,750 |
|
|
|
3.750% |
|
|
|
3.800% |
|
|
November 3, 2045 |
|
|
3,000 |
|
|
|
3,000 |
|
|
|
4.450% |
|
|
|
4.492% |
|
|
August 8, 2046 |
|
|
4,500 |
|
|
|
4,500 |
|
|
|
3.700% |
|
|
|
3.743% |
|
|
February 6, 2047 |
|
|
3,000 |
|
|
|
3,000 |
|
|
|
4.250% |
|
|
|
4.287% |
|
|
February 12, 2055 |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
4.000% |
|
|
|
4.063% |
|
|
November 3, 2055 |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
4.750% |
|
|
|
4.782% |
|
|
August 8, 2056 |
|
|
2,250 |
|
|
|
2,250 |
|
|
|
3.950% |
|
|
|
4.033% |
|
|
February 6, 2057 |
|
|
2,000 |
|
|
|
2,000 |
|
|
|
4.500% |
|
|
|
4.528% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
72,781 |
|
|
$ |
76,898 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Euro-denominated debt securities. |
|
(In millions) |
|
|
|
|
|
|
|
|||
|
|
|
|
||
|
Year Ending June 30, |
|
|
|
|
|
|
|
|||
|
2020 |
|
$ |
5,518 |
|
|
2021 |
|
|
3,750 |
|
|
2022 |
|
|
7,994 |
|
|
2023 |
|
|
2,750 |
|
|
2024 |
|
|
5,250 |
|
|
Thereafter |
|
|
47,519 |
|
|
|
|
|||
|
|
|
|||
|
Total |
|
$ |
72,781 |
|
|
|
|
|
|
|
|
(In millions) |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Current Taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal |
|
$ |
4,718 |
|
|
$ |
19,764 |
|
|
$ |
2,739 |
|
|
U.S. state and local |
|
|
662 |
|
|
|
934 |
|
|
|
30 |
|
|
Foreign |
|
|
5,531 |
|
|
|
4,348 |
|
|
|
2,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current taxes |
|
$ |
10,911 |
|
|
$ |
25,046 |
|
|
$ |
5,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal |
|
$ |
(5,647 |
) |
|
$ |
(4,292 |
) |
|
$ |
(554 |
) |
|
U.S. state and local |
|
|
(1,010 |
) |
|
|
(458 |
) |
|
|
269 |
|
|
Foreign |
|
|
194 |
|
|
|
(393 |
) |
|
|
(544 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred taxes |
|
$ |
(6,463 |
) |
|
$ |
(5,143 |
) |
|
$ |
(829 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
$ |
4,448 |
|
|
$ |
19,903 |
|
|
$ |
4,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
U.S. |
|
$ |
15,799 |
|
|
$ |
11,527 |
|
|
$ |
6,843 |
|
|
Foreign |
|
|
27,889 |
|
|
|
24,947 |
|
|
|
23,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
43,688 |
|
|
$ |
36,474 |
|
|
$ |
29,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Federal statutory rate |
|
|
21.0% |
|
|
|
28.1% |
|
|
|
35.0% |
|
|
Effect of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign earnings taxed at lower rates |
|
|
(4.1)% |
|
|
|
(7.8)% |
|
|
|
(11.6)% |
|
|
Impact of the enactment of the TCJA |
|
|
0.4% |
|
|
|
37.7% |
|
|
|
0% |
|
|
Phone business losses |
|
|
0% |
|
|
|
0% |
|
|
|
(5.7)% |
|
|
Impact of intangible property transfers |
|
|
(5.9)% |
|
|
|
0% |
|
|
|
0% |
|
|
Foreign-derived intangible income deduction |
|
|
(1.4)% |
|
|
|
0% |
|
|
|
0% |
|
|
Research and development credit |
|
|
(1.1)% |
|
|
|
(1.3)% |
|
|
|
(0.9)% |
|
|
Excess tax benefits relating to stock-based compensation |
|
|
(2.2)% |
|
|
|
(2.5)% |
|
|
|
(2.1)% |
|
|
Interest, net |
|
|
1.0% |
|
|
|
1.2% |
|
|
|
1.4% |
|
|
Other reconciling items, net |
|
|
2.5% |
|
|
|
(0.8)% |
|
|
|
(1.3)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective rate |
|
|
10.2% |
|
|
|
54.6% |
|
|
|
14.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
|
June 30, |
|
2019 |
|
|
2018 |
|
||||
|
|
|
|
||||||||
|
Deferred Income Tax Assets |
|
|
|
|
|
|
|
|
||
|
|
|
|
||||||||
|
Stock-based compensation expense |
|
$ |
406 |
|
|
$ |
460 |
|
||
|
Accruals, reserves, and other expenses |
|
|
2,287 |
|
|
|
1,832 |
|
||
|
Loss and credit carryforwards |
|
|
3,518 |
|
|
|
3,369 |
|
||
|
Depreciation and amortization |
|
|
7,046 |
|
|
|
351 |
|
||
|
Leasing liabilities |
|
|
1,594 |
|
|
|
1,427 |
|
||
|
Unearned revenue |
|
|
475 |
|
|
|
0 |
|
||
|
Other |
|
|
367 |
|
|
|
56 |
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Deferred income tax assets |
|
|
15,693 |
|
|
|
7,495 |
|
||
|
Less valuation allowance |
|
|
(3,214 |
) |
|
|
(3,186 |
) |
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Deferred income tax assets, net of valuation allowance |
|
$ |
12,479 |
|
|
$ |
4,309 |
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Deferred Income Tax Liabilities |
|
|
|
|
|
|
|
|
||
|
|
|
|
||||||||
|
Unrealized gain on investments and debt |
|
$ |
(738 |
) |
|
$ |
0 |
|
||
|
Unearned revenue |
|
|
(30 |
) |
|
|
(639 |
) |
||
|
Depreciation and amortization |
|
|
0 |
|
|
|
(1,164 |
) |
||
|
Leasing assets |
|
|
(1,510 |
) |
|
|
(1,366 |
) |
||
|
Deferred GILTI tax liabilities |
|
|
(2,607 |
) |
|
|
(61 |
) |
||
|
Other |
|
|
(291 |
) |
|
|
(251 |
) |
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Deferred income tax liabilities |
|
$ |
(5,176 |
) |
|
$ |
(3,481 |
) |
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Net deferred income tax assets (liabilities) |
|
$ |
7,303 |
|
|
$ |
828 |
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
||||||||
|
Reported As |
|
|
|
|
|
|
|
|
||
|
|
|
|
||||||||
|
Other long-term assets |
|
$ |
7,536 |
|
|
$ |
1,369 |
|
||
|
Long-term deferred income tax liabilities |
|
|
(233 |
) |
|
|
(541 |
) |
||
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
Net deferred income tax assets (liabilities) |
|
$ |
7,303 |
|
|
$ |
828 |
|
||
|
|
|
|
|
|
|
|
|
|
||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Beginning unrecognized tax benefits |
|
$ |
11,961 |
|
|
$ |
11,737 |
|
|
$ |
10,164 |
|
|
Decreases related to settlements |
|
|
(316 |
) |
|
|
(193 |
) |
|
|
(4 |
) |
|
Increases for tax positions related to the current year |
|
|
2,106 |
|
|
|
1,445 |
|
|
|
1,277 |
|
|
Increases for tax positions related to prior years |
|
|
508 |
|
|
|
151 |
|
|
|
397 |
|
|
Decreases for tax positions related to prior years |
|
|
(1,113 |
) |
|
|
(1,176 |
) |
|
|
(49 |
) |
|
Decreases due to lapsed statutes of limitations |
|
|
0 |
|
|
|
(3 |
) |
|
|
(48 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending unrecognized tax benefits |
|
$ |
13,146 |
|
|
$ |
11,961 |
|
|
$ |
11,737 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
||
|
|
|
|||||||
|
|
|
|
|
|||||
|
June 30, |
|
2019 |
|
|
2018 |
|
||
|
|
|
|
||||||
|
Productivity and Business Processes |
|
$ |
16,831 |
|
|
$ |
14,864 |
|
|
Intelligent Cloud |
|
|
16,988 |
|
|
|
14,706 |
|
|
More Personal Computing |
|
|
3,387 |
|
|
|
3,150 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
|
Total |
|
$ |
37,206 |
|
|
$ |
32,720 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
Year Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|||
|
Balance, beginning of period |
|
|
$ |
32,720 |
|
|
Deferral of revenue |
|
|
|
69,493 |
|
|
Recognition of unearned revenue |
|
|
|
(65,007 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period |
|
|
$ |
37,206 |
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Year Ended June 30, |
|
2019 |
|
|
|
2018 |
|
|
|
2017 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Operating lease cost |
|
$ |
1,707 |
|
|
$ |
1,585 |
|
|
$ |
1,412 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Finance lease cost: |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Amortization of right-of-use assets |
|
$ |
370 |
|
|
$ |
243 |
|
|
$ |
104 |
|
||
|
Interest on lease liabilities |
|
|
247 |
|
|
|
175 |
|
|
|
68 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Total finance lease cost |
|
$ |
617 |
|
|
$ |
418 |
|
|
$ |
172 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Year Ended June 30, |
|
2019 |
|
|
|
2018 |
|
|
|
2017 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Operating cash flows from operating leases |
|
$ |
1,670 |
|
|
$ |
1,522 |
|
|
$ |
1,157 |
|
||
|
Operating cash flows from finance leases |
|
|
247 |
|
|
|
175 |
|
|
|
68 |
|
||
|
Financing cash flows from finance leases |
|
|
221 |
|
|
|
144 |
|
|
|
46 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Right-of-use assets obtained in exchange for lease obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Operating leases |
|
|
2,303 |
|
|
|
1,571 |
|
|
|
1,270 |
|
||
|
Finance leases |
|
|
2,532 |
|
|
|
1,933 |
|
|
|
1,773 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
(In millions, except lease term and discount rate) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
||||||
|
June 30, |
|
2019 |
|
|
2018 |
|
||
|
|
|
|
||||||
|
Operating Leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease right-of-use assets |
|
$ |
7,379 |
|
|
$ |
6,686 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities |
|
$ |
1,515 |
|
|
$ |
1,399 |
|
|
Operating lease liabilities |
|
|
6,188 |
|
|
|
5,568 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating lease liabilities |
|
$ |
7,703 |
|
|
$ |
6,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance Leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, at cost |
|
$ |
7,041 |
|
|
$ |
4,543 |
|
|
Accumulated depreciation |
|
|
(774 |
) |
|
|
(404 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
$ |
6,267 |
|
|
$ |
4,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities |
|
$ |
317 |
|
|
$ |
176 |
|
|
Other long-term liabilities |
|
|
6,257 |
|
|
|
4,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total finance lease liabilities |
|
$ |
6,574 |
|
|
$ |
4,301 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Remaining Lease Term |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
|
7 years |
|
|
|
7 years |
|
|
Finance leases |
|
|
13 years |
|
|
|
13 years |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Discount Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases |
|
|
3.0% |
|
|
|
2.7% |
|
|
Finance leases |
|
|
4.6% |
|
|
|
5.2% |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
Year Ending June 30, |
|
Operating Leases |
|
|
Finance Leases |
|
||
|
|
|
|
||||||
|
2020 |
|
$ |
1,678 |
|
|
$ |
591 |
|
|
2021 |
|
|
1,438 |
|
|
|
616 |
|
|
2022 |
|
|
1,235 |
|
|
|
626 |
|
|
2023 |
|
|
1,036 |
|
|
|
631 |
|
|
2024 |
|
|
839 |
|
|
|
641 |
|
|
Thereafter |
|
|
2,438 |
|
|
|
5,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total lease payments |
|
|
8,664 |
|
|
|
8,776 |
|
|
Less imputed interest |
|
|
(961 |
) |
|
|
(2,202 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
7,703 |
|
|
$ |
6,574 |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Balance, beginning of year |
|
|
7,677 |
|
|
|
7,708 |
|
|
|
7,808 |
|
|
Issued |
|
|
116 |
|
|
|
68 |
|
|
|
70 |
|
|
Repurchased |
|
|
(150 |
) |
|
|
(99 |
) |
|
|
(170 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance, end of year |
|
|
7,643 |
|
|
|
7,677 |
|
|
|
7,708 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
||||||
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
|
First Quarter |
|
|
24 |
|
|
$ |
2,600 |
|
|
|
22 |
|
|
$ |
1,600 |
|
|
|
63 |
|
|
$ |
3,550 |
|
|
Second Quarter |
|
|
57 |
|
|
|
6,100 |
|
|
|
22 |
|
|
|
1,800 |
|
|
|
59 |
|
|
|
3,533 |
|
|
Third Quarter |
|
|
36 |
|
|
|
3,899 |
|
|
|
34 |
|
|
|
3,100 |
|
|
|
25 |
|
|
|
1,600 |
|
|
Fourth Quarter |
|
|
33 |
|
|
|
4,200 |
|
|
|
21 |
|
|
|
2,100 |
|
|
|
23 |
|
|
|
1,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total |
|
|
150 |
|
|
$ |
16,799 |
|
|
|
99 |
|
|
$ |
8,600 |
|
|
|
170 |
|
|
$ |
10,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declaration Date |
Record Date |
|
|
Payment Date |
|
Dividend Per Share |
|
|
Amount |
|
||||||
|
|
|
|||||||||||||||
|
|
|
|||||||||||||||
|
Fiscal Year 2019 |
|
|
|
|
|
|
|
|
(In millions) |
|
||||||
|
|
|
|
|
|
||||||||||||
|
September 18, 2018 |
|
|
November 15, 2018 |
|
|
|
December 13, 2018 |
|
|
$ |
0.46 |
|
|
$ |
3,544 |
|
|
November 28, 2018 |
|
|
February 21, 2019 |
|
|
|
March 14, 2019 |
|
|
|
0.46 |
|
|
|
3,526 |
|
|
March 11, 2019 |
|
|
May 16, 2019 |
|
|
|
June 13, 2019 |
|
|
|
0.46 |
|
|
|
3,521 |
|
|
June 12, 2019 |
|
|
August 15, 2019 |
|
|
|
September 12, 2019 |
|
|
|
0.46 |
|
|
|
3,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
$ |
1.84 |
|
|
$ |
14,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 19, 2017 |
|
|
November 16, 2017 |
|
|
|
December 14, 2017 |
|
|
$ |
0.42 |
|
|
$ |
3,238 |
|
|
November 29, 2017 |
|
|
February 15, 2018 |
|
|
|
March 8, 2018 |
|
|
|
0.42 |
|
|
|
3,232 |
|
|
March 12, 2018 |
|
|
May 17, 2018 |
|
|
|
June 14, 2018 |
|
|
|
0.42 |
|
|
|
3,226 |
|
|
June 13, 2018 |
|
|
August 16, 2018 |
|
|
|
September 13, 2018 |
|
|
|
0.42 |
|
|
|
3,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
$ |
1.68 |
|
|
$ |
12,916 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Balance, beginning of period |
|
$ |
173 |
|
|
$ |
134 |
|
|
$ |
352 |
|
|
Unrealized gains, net of tax of $2, $11, and $4 |
|
|
160 |
|
|
|
218 |
|
|
|
328 |
|
|
Reclassification adjustments for gains included in revenue |
|
|
(341 |
) |
|
|
(185 |
) |
|
|
(555 |
) |
|
Tax expense included in provision for income taxes |
|
|
8 |
|
|
|
6 |
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified from accumulated other comprehensive income (loss) |
|
|
(333 |
) |
|
|
(179 |
) |
|
|
(546 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change related to derivatives, net of tax of $(6), $5, and $(5) |
|
|
(173 |
) |
|
|
39 |
|
|
|
(218 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period |
|
$ |
0 |
|
|
$ |
173 |
|
|
$ |
134 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|||||||||
|
Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Balance, beginning of period |
|
$ |
(850 |
) |
|
$ |
1,825 |
|
|
$ |
2,941 |
|
|
Unrealized gains (losses), net of tax of $616, $(427), and $267 |
|
|
2,331 |
|
|
|
(1,146 |
) |
|
|
517 |
|
|
Reclassification adjustments for (gains) losses included in other income (expense), net |
|
|
93 |
|
|
|
(2,309 |
) |
|
|
(2,513 |
) |
|
Tax expense (benefit) included in provision for income taxes |
|
|
(19 |
) |
|
|
738 |
|
|
|
880 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Amounts reclassified from accumulated other comprehensive income (loss) |
|
|
74 |
|
|
|
(1,571 |
) |
|
|
(1,633 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Net change related to investments, net of tax of $635, $(1,165), and $(613) |
|
|
2,405 |
|
|
|
(2,717 |
) |
|
|
(1,116 |
) |
|
Cumulative effect of accounting changes |
|
|
(67 |
) |
|
|
42 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance, end of period |
|
$ |
1,488 |
|
|
$ |
(850 |
) |
|
$ |
1,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|||||||||
|
Translation Adjustments and Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Balance, beginning of period |
|
$ |
(1,510 |
) |
|
$ |
(1,332 |
) |
|
$ |
(1,499 |
) |
|
Translation adjustments and other, net of tax effects of $(1), $0, and $9 |
|
|
(318 |
) |
|
|
(178 |
) |
|
|
167 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance, end of period |
|
$ |
(1,828 |
) |
|
$ |
(1,510 |
) |
|
$ |
(1,332 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
|
Accumulated other comprehensive income (loss), end of period |
|
$ |
(340 |
) |
|
$ |
(2,187 |
) |
|
$ |
627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Stock-based compensation expense |
|
$ |
4,652 |
|
|
$ |
3,940 |
|
|
$ |
3,266 |
|
|
Income tax benefits related to stock-based compensation |
|
|
816 |
|
|
|
823 |
|
|
|
1,066 |
|
|
|
|
|||||||||||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Dividends per share (quarterly amounts) |
|
|
$0.42 - $0.46 |
|
|
|
$0.39 - $0.42 |
|
|
|
$0.36 - $0.39 |
|
|
Interest rates |
|
|
1.8% - 3.1% |
|
|
|
1.7% - 2.9% |
|
|
|
1.2% - 2.2% |
|
|
|
|
|||||||||||
|
Shares |
|
|
Weighted Average Grant-Date Fair Value |
|
||||
|
|
|
|||||||
|
|
|
|||||||
|
(In millions) |
|
|
|
|
||||
|
|
||||||||
|
Stock Awards |
|
|||||||
|
|
|
|
||||||
|
Nonvested balance, beginning of year |
|
|
174 |
|
|
$ |
57.85 |
|
|
Granted (a) |
|
|
63 |
|
|
|
107.02 |
|
|
Vested |
|
|
(77 |
) |
|
|
57.08 |
|
|
Forfeited |
|
|
(13 |
) |
|
|
69.35 |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
Nonvested balance, end of year |
|
|
147 |
|
|
$ |
78.49 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Includes 2 million, 3 million, and 2 million of PSUs granted at target and performance adjustments above target levels for fiscal years 2019, 2018, and 2017, respectively. |
|
(Shares in millions) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Shares purchased |
|
|
11 |
|
|
|
13 |
|
|
|
13 |
|
|
Average price per share |
|
$ |
104.85 |
|
|
$ |
76.40 |
|
|
$ |
56.36 |
|
|
|
|
|||||||||||
|
|
• |
Office Commercial, including Office 365 subscriptions and Office licensed on-premises, comprising Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, and Skype for Business, and related Client Access Licenses (“CALs”). |
|
|
• |
Office Consumer, including Office 365 subscriptions and Office licensed on-premises, and Office Consumer Services, including Skype, Outlook.com, and OneDrive. |
|
|
• |
LinkedIn, including Talent Solutions, Marketing Solutions, and Premium Subscriptions. |
|
|
• |
Dynamics business solutions, including Dynamics 365, a set of cloud-based applications across ERP and CRM, Dynamics ERP on-premises, and Dynamics CRM on-premises. |
|
|
• |
Server products and cloud services, including Microsoft SQL Server, Windows Server, Visual Studio, System Center, and related CALs, GitHub, and Azure. |
|
|
• |
Enterprise Services, including Premier Support Services and Microsoft Consulting Services. |
|
|
• |
Windows, including Windows OEM licensing and other non-volume licensing of the Windows operating system; Windows Commercial, comprising volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings; patent licensing; Windows Internet of Things (“IoT”); and MSN advertising. |
|
|
• |
Devices, including Microsoft Surface, PC accessories, and other intelligent devices. |
|
|
• |
Gaming, including Xbox hardware and Xbox software and services, comprising Xbox Live transactions, subscriptions, cloud services, and advertising (“Xbox Live”), video games, and third-party video game royalties. |
|
|
• |
Search. |
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|||||||||||
|
Year Ended June 30, |
|
|
2019 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Productivity and Business Processes |
|
$ |
41,160 |
|
|
$ |
35,865 |
|
|
$ |
29,870 |
|
|
Intelligent Cloud |
|
|
38,985 |
|
|
|
32,219 |
|
|
|
27,407 |
|
|
More Personal Computing |
|
|
45,698 |
|
|
|
42,276 |
|
|
|
39,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
125,843 |
|
|
$ |
110,360 |
|
|
$ |
96,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Productivity and Business Processes |
|
$ |
16,219 |
|
|
$ |
12,924 |
|
|
$ |
11,389 |
|
|
Intelligent Cloud |
|
|
13,920 |
|
|
|
11,524 |
|
|
|
9,127 |
|
|
More Personal Computing |
|
|
12,820 |
|
|
|
10,610 |
|
|
|
8,815 |
|
|
Corporate and Other |
|
|
0 |
|
|
|
0 |
|
|
|
(306 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
42,959 |
|
|
$ |
35,058 |
|
|
$ |
29,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|||||||||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
United States (a) |
|
$ |
64,199 |
|
|
$ |
55,926 |
|
|
$ |
51,078 |
|
|
Other countries |
|
|
61,644 |
|
|
|
54,434 |
|
|
|
45,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
125,843 |
|
|
$ |
110,360 |
|
|
$ |
96,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Includes billings to OEMs and certain multinational organizations because of the nature of these businesses and the impracticability of determining the geographic source of the revenue. |
|
(In millions) |
|
|
|
|||||||||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
Year Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
Server products and cloud services |
|
$ |
32,622 |
|
|
$ |
26,129 |
|
|
$ |
21,649 |
|
|
Office products and cloud services |
|
|
31,769 |
|
|
|
28,316 |
|
|
|
25,573 |
|
|
Windows |
|
|
20,395 |
|
|
|
19,518 |
|
|
|
18,593 |
|
|
Gaming |
|
|
11,386 |
|
|
|
10,353 |
|
|
|
9,051 |
|
|
Search advertising |
|
|
7,628 |
|
|
|
7,012 |
|
|
|
6,219 |
|
|
|
|
|
6,754 |
|
|
|
5,259 |
|
|
|
2,271 |
|
|
Enterprise Services |
|
|
6,124 |
|
|
|
5,846 |
|
|
|
5,542 |
|
|
Devices |
|
|
6,095 |
|
|
|
5,134 |
|
|
|
5,062 |
|
|
Other |
|
|
3,070 |
|
|
|
2,793 |
|
|
|
2,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
125,843 |
|
|
$ |
110,360 |
|
|
$ |
96,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|||||||||
|
|
|
|||||||||||
|
|
|
|
|
|
||||||||
|
June 30, |
|
2019 |
|
|
2018 |
|
|
2017 |
|
|||
|
|
|
|
|
|||||||||
|
United States |
|
$ |
55,252 |
|
|
$ |
44,501 |
|
|
$ |
42,730 |
|
|
Ireland |
|
|
12,958 |
|
|
|
12,843 |
|
|
|
12,889 |
|
|
Other countries |
|
|
25,422 |
|
|
|
22,538 |
|
|
|
19,898 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
93,632 |
|
|
$ |
79,882 |
|
|
$ |
75,517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
September 30 |
|
|
December 31 |
|
|
March 31 |
|
|
June 30 |
|
|
Total |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
29,084 |
|
|
$ |
32,471 |
|
|
$ |
30,571 |
|
|
$ |
33,717 |
|
|
$ |
125,843 |
|
|
Gross margin |
|
|
19,179 |
|
|
|
20,048 |
|
|
|
20,401 |
|
|
|
23,305 |
|
|
|
82,933 |
|
|
Operating income |
|
|
9,955 |
|
|
|
10,258 |
|
|
|
10,341 |
|
|
|
12,405 |
|
|
|
42,959 |
|
|
Net income (a) |
|
|
8,824 |
|
|
|
8,420 |
|
|
|
8,809 |
|
|
|
13,187 |
|
|
|
39,240 |
|
|
Basic earnings per share |
|
|
1.15 |
|
|
|
1.09 |
|
|
|
1.15 |
|
|
|
1.72 |
|
|
|
5.11 |
|
|
Diluted earnings per share (b) |
|
|
1.14 |
|
|
|
1.08 |
|
|
|
1.14 |
|
|
|
1.71 |
|
|
|
5.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
24,538 |
|
|
$ |
28,918 |
|
|
$ |
26,819 |
|
|
$ |
30,085 |
|
|
$ |
110,360 |
|
|
Gross margin |
|
|
16,260 |
|
|
|
17,854 |
|
|
|
17,550 |
|
|
|
20,343 |
|
|
|
72,007 |
|
|
Operating income |
|
|
7,708 |
|
|
|
8,679 |
|
|
|
8,292 |
|
|
|
10,379 |
|
|
|
35,058 |
|
|
Net income (loss) (c) |
|
|
6,576 |
|
|
|
(6,302 |
) |
|
|
7,424 |
|
|
|
8,873 |
|
|
|
16,571 |
|
|
Basic earnings (loss) per share |
|
|
0.85 |
|
|
|
(0.82 |
) |
|
|
0.96 |
|
|
|
1.15 |
|
|
|
2.15 |
|
|
Diluted earnings (loss) per share (d) |
|
|
0.84 |
|
|
|
(0.82 |
) |
|
|
0.95 |
|
|
|
1.14 |
|
|
|
2.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Reflects the $157 million net charge related to the enactment of the TCJA for the second quarter and the $2.6 billion net income tax benefit related to the intangible property transfers for the fourth quarter, which together increased net income by $2.4 billion for fiscal year 2019. See Note 12 – Income Taxes for further information. |
|
(b) |
Reflects the net charge related to the enactment of the TCJA and the net income tax benefit related to the intangible property transfers, which decreased (increased) diluted EPS $0.02 for the second quarter, $(0.34) for the fourth quarter, and $(0.31) for fiscal year 2019. |
|
(c) |
Reflects the net charge (benefit) related to the enactment of the TCJA of $13.8 billion for the second quarter, $(104) million for the fourth quarter, and $13.7 billion for fiscal year 2018. |
|
|
• |
Determination of whether products and services are considered distinct performance obligations that should be accounted for separately versus together, such as software licenses and related services that are sold with cloud-based services. |
|
|
• |
Determination of stand-alone selling prices for each distinct performance obligation and for products and services that are not sold separately. |
|
|
• |
The pattern of delivery (i.e., timing of when revenue is recognized) for each distinct performance obligation. |
|
|
• |
Estimation of variable consideration when determining the amount of revenue to recognize (e.g., customer credits, incentives, and in certain instances, estimation of customer usage of products and services). |
|
|
• |
We tested the effectiveness of internal controls related to the identification of distinct performance obligations, the determination of the timing of revenue recognition, and the estimation of variable consideration. |
|
|
• |
We evaluated management’s significant accounting policies related to these customer agreements for reasonableness. |
|
|
• |
We selected a sample of customer agreements and performed the following procedures: |
|
|
• |
Obtained and read contract source documents for each selection, including master agreements, and other documents that were part of the agreement. |
|
|
• |
Tested management’s identification of significant terms for completeness, including the identification of distinct performance obligations and variable consideration. |
|
|
• |
Assessed the terms in the customer agreement and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions. |
|
|
• |
We evaluated the reasonableness of management’s estimate of stand-alone selling prices for products and services that are not sold separately. |
|
|
• |
We tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements. |
|
|
• |
We evaluated the appropriateness and consistency of management’s methods and assumptions used in the identification, recognition, measurement, and disclosure of uncertain tax positions, which included testing the effectiveness of the related internal controls. |
|
|
• |
We read and evaluated management’s documentation, including relevant accounting policies and information obtained by management from outside tax specialists, that detailed the basis of the uncertain tax positions. |
|
|
• |
We tested the reasonableness of management’s judgments regarding the future resolution of the uncertain tax positions, including an evaluation of the technical merits of the uncertain tax positions. |
|
|
• |
For those uncertain tax positions that had not been effectively settled, we evaluated whether management had appropriately considered new information that could significantly change the recognition, measurement or disclosure of the uncertain tax positions. |
|
|
• |
We evaluated the reasonableness of management’s estimates by considering how tax law, including statutes, regulations and case law, impacted management’s judgments. |
|
(a) |
Financial Statements and Schedules |
|
Index to Financial Statements |
Page |
|
||
|
|
|
|||
|
|
|
|||
|
|
51 |
|
||
|
|
|
|||
|
|
52 |
|
||
|
|
|
|||
|
|
53 |
|
||
|
|
|
|||
|
|
54 |
|
||
|
|
|
|||
|
|
55 |
|
||
|
|
|
|||
|
|
56 |
|
||
|
|
|
|||
|
|
93 |
|
||
|
(b) |
Exhibit Listing |
|
|
|
|
|
|
Incorporated by Reference |
|
||||||||||||||
|
Exhibit |
|
Exhibit Description |
|
Filed Herewith |
|
Form |
|
|
Period Ending |
|
|
Exhibit |
|
|
Filing Date |
|
||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
3.1 |
|
Amended and Restated Articles of Incorporation of Microsoft Corporation |
|
|
|
|
8-K |
|
|
|
|
|
|
|
3.1 |
|
|
|
12/1/16 |
|
|
|
|
|
|
|
|
|
||||||||||||||
|
3.2 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
3.2 |
|
|
|
6/14/17 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
4.1 |
|
|
|
|
|
S-3ASR |
|
|
|
|
|
|
|
4.1 |
|
|
|
11/20/08 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
4.2 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.2 |
|
|
|
5/15/09 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
4.5 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.2 |
|
|
|
9/27/10 |
|
|
|
|
|
|
|
|
Incorporated by Reference |
|
||||||||||||||
|
Exhibit |
|
Exhibit Description |
|
Filed Herewith |
|
Form |
|
|
Period Ending |
|
|
Exhibit |
|
|
Filing Date |
|
||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
4.6 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.2 |
|
|
|
2/8/11 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
4.7 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.1 |
|
|
|
11/7/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.8 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.1 |
|
|
|
5/1/13 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
4.9 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.2 |
|
|
|
5/1/13 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
4.10 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.1 |
|
|
|
12/6/13 |
|
|
|
|
|
|
|
|
Incorporated by Reference |
|
||||||||||||||
|
Exhibit |
|
Exhibit Description |
|
Filed Herewith |
|
Form |
|
|
Period Ending |
|
|
Exhibit |
|
|
Filing Date |
|
||||
|
|
|
|
|
|
|
|
|
|||||||||||||
|
4.11 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.2 |
|
|
|
12/6/13 |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
4.12 |
|
|
|
|
|
8-K |
|
|
|
|
|
|
|
4.1 |
|
|
|
2/12/15 |
|
|
|
|
|
|
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4.13 |
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8-K |
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4.1 |
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11/3/15 |
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4.14 |
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8-K |
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4.1 |
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8/5/16 |
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Incorporated by Reference |
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Exhibit |
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Exhibit Description |
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Filed Herewith |
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Form |
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Period Ending |
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Exhibit |
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Filing Date |
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4.15 |
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8-K |
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4.1 |
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2/3/17 |
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4.16 |
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X |
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10.1* |
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10-Q |
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9/30/16 |
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10.1 |
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10/20/16 |
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10.4* |
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10-K |
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6/30/12 |
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10.4 |
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7/26/12 |
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10.5* |
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10-K |
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6/30/18 |
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10.5 |
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8/3/18 |
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10.6* |
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DEF14A |
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Annex C |
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10/16/17 |
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10.7* |
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Form of Stock Award Agreement Under the Microsoft Corporation 2017 Stock Plan |
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10-Q |
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3/31/2018 |
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10.26 |
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4/26/18 |
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10.8* |
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Form of Performance Stock Award Agreement Under the Microsoft Corporation 2017 Stock Plan |
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10-Q |
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3/31/2018 |
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10.27 |
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4/26/18 |
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10.12 |
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10-Q |
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9/30/16 |
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10.12 |
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10/20/16 |
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10.13 |
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X |
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10.14* |
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Microsoft Corporation Deferred Compensation Plan for Non-Employee Directors |
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10-Q |
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12/31/17 |
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10.14 |
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1/31/18 |
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10.15* |
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8-K |
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10.1 |
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9/19/18 |
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10.19* |
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10-Q |
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9/30/16 |
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10.17 |
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10/20/16 |
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10.20* |
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10-Q |
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9/30/16 |
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10.18 |
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10/20/16 |
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* |
Indicates a management contract or compensatory plan or arrangement. |
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** |
Furnished, not filed. |
|
MICROSOFT CORPORATION |
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/S/ FRANK H. BROD |
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Frank H. Brod |
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Corporate Vice President, Finance and Administration; Chief Accounting Officer (Principal Accounting Officer)
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Signature |
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Title |
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/s/ JOHN W. THOMPSON
John W. Thompson |
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Chairman |
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/s/ SATYA NADELLA
Satya Nadella |
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Director and Chief Executive Officer |
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/s/ WILLIAM H. GATES III
William H. Gates III |
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Director |
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/s/ REID HOFFMAN
Reid Hoffman |
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Director |
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/s/ HUGH F. JOHNSTON
Hugh F. Johnston |
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Director |
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/s/ TERI L. LIST-STOLL
Teri L. List-Stoll |
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Director |
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/s/ CHARLES H. NOSKI
Charles H. Noski |
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Director |
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/s/ HELMUT PANKE
Helmut Panke |
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Director |
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/s/ SANDRA E. PETERSON
Sandra E. Peterson |
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Director |
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/s/ PENNY S. PRITZKER
Penny S. Pritzker |
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Director |
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/s/ CHARLES W. SCHARF
Charles W. Scharf |
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Director |
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/s/ ARNE M. SORENSON
Arne M. Sorenson |
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Director |
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/s/ JOHN W. STANTON
John W. Stanton |
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Director |
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/s/ PADMASREE WARRIOR
Padmasree Warrior |
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Director |
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/s/ AMY E. HOOD
Amy E. Hood |
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Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
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/s/ FRANK H. BROD
Frank H. Brod |
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Corporate Vice President, Finance and Administration; Chief Accounting Officer (Principal Accounting Officer) |
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 91-1646860 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, par value $.01 per share | Nasdaq Global Select Market | |
Large accelerated filer | x | Accelerated filer | ¨ | ||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | ||
Emerging growth company | ¨ | ||||
Aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2018 | $ | 693,894,417,636 | |
Number of shares of common stock outstanding as of January 23, 2019 | 491,202,890 | ||
Page | ||
PART I | ||
Item 1. | ||
Item 1A. | ||
Item 1B. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 5. | ||
Item 6. | ||
Item 7. | ||
Item 7A. | ||
Item 8. | ||
Item 9. | ||
Item 9A. | ||
Item 9B. | ||
PART III | ||
Item 10. | ||
Item 11. | ||
Item 12. | ||
Item 13. | ||
Item 14. | ||
PART IV | ||
Item 15. | ||
Item 16. | ||
Item 1. | Business |
Name | Age | Position | ||
Jeffrey P. Bezos | 55 | President, Chief Executive Officer, and Chairman of the Board | ||
Jeffrey M. Blackburn | 49 | Senior Vice President, Business Development | ||
Andrew R. Jassy | 51 | CEO Amazon Web Services | ||
Brian T. Olsavsky | 55 | Senior Vice President and Chief Financial Officer | ||
Shelley L. Reynolds | 54 | Vice President, Worldwide Controller, and Principal Accounting Officer | ||
Jeffrey A. Wilke | 52 | CEO Worldwide Consumer | ||
David A. Zapolsky | 55 | Senior Vice President, General Counsel, and Secretary | ||
Name | Age | Position | ||
Jeffrey P. Bezos | 55 | President, Chief Executive Officer, and Chairman of the Board | ||
Tom A. Alberg | 78 | Managing Director, Madrona Venture Group | ||
Jamie S. Gorelick | 68 | Partner, Wilmer Cutler Pickering Hale and Dorr LLP | ||
Daniel P. Huttenlocher | 60 | Dean and Vice Provost, Cornell Tech at Cornell University | ||
Judith A. McGrath | 66 | Senior Advisor, Astronauts Wanted * No experience necessary | ||
Jonathan J. Rubinstein | 62 | Former co-CEO, Bridgewater Associates, LP | ||
Thomas O. Ryder | 74 | Retired, Former Chairman, Reader’s Digest Association, Inc. | ||
Patricia Q. Stonesifer | 62 | President and Chief Executive Officer, Martha’s Table | ||
Wendell P. Weeks | 59 | Chief Executive Officer, Corning Incorporated | ||
Item 1A. | Risk Factors |
• | our ability to retain and increase sales to existing customers, attract new customers, and satisfy our customers’ demands; |
• | our ability to retain and expand our network of sellers; |
• | our ability to offer products on favorable terms, manage inventory, and fulfill orders; |
• | the introduction of competitive stores, websites, products, services, price decreases, or improvements; |
• | changes in usage or adoption rates of the Internet, e-commerce, electronic devices, and web services, including outside the U.S.; |
• | timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure; |
• | the success of our geographic, service, and product line expansions; |
• | the extent to which we finance, and the terms of any such financing for, our current operations and future growth; |
• | the outcomes of legal proceedings and claims, which may include significant monetary damages or injunctive relief and could have a material adverse impact on our operating results; |
• | variations in the mix of products and services we sell; |
• | variations in our level of merchandise and vendor returns; |
• | the extent to which we offer free shipping, continue to reduce prices worldwide, and provide additional benefits to our customers; |
• | factors affecting our reputation or brand image; |
• | the extent to which we invest in technology and content, fulfillment, and other expense categories; |
• | increases in the prices of fuel and gasoline, as well as increases in the prices of other energy products and commodities like paper and packing supplies; |
• | the extent to which our equity-method investees record significant operating and non-operating items; |
• | the extent to which operators of the networks between our customers and our stores successfully charge fees to grant our customers unimpaired and unconstrained access to our online services; |
• | our ability to collect amounts owed to us when they become due; |
• | the extent to which use of our services is affected by spyware, viruses, phishing and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; and |
• | terrorist attacks and armed hostilities. |
• | local economic and political conditions; |
• | government regulation (such as regulation of our product and service offerings and of competition); restrictive governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs); nationalization; and restrictions on foreign ownership; |
• | restrictions on sales or distribution of certain products or services and uncertainty regarding liability for products, services, and content, including uncertainty as a result of less Internet-friendly legal systems, local laws, lack of legal precedent, and varying rules, regulations, and practices regarding the physical and digital distribution of media products and enforcement of intellectual property rights; |
• | business licensing or certification requirements, such as for imports, exports, web services, and electronic devices; |
• | limitations on the repatriation and investment of funds and foreign currency exchange restrictions; |
• | limited fulfillment and technology infrastructure; |
• | shorter payable and longer receivable cycles and the resultant negative impact on cash flow; |
• | laws and regulations regarding consumer and data protection, privacy, network security, encryption, payments, and restrictions on pricing or discounts; |
• | lower levels of use of the Internet; |
• | lower levels of consumer spending and fewer opportunities for growth compared to the U.S.; |
• | lower levels of credit card usage and increased payment risk; |
• | difficulty in staffing, developing, and managing foreign operations as a result of distance, language, and cultural differences; |
• | different employee/employer relationships and the existence of works councils and labor unions; |
• | compliance with the U.S. Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting corrupt payments to government officials and other third parties; |
• | laws and policies of the U.S. and other jurisdictions affecting trade, foreign investment, loans, and taxes; and |
• | geopolitical events, including war and terrorism. |
• | disruption of our ongoing business, including loss of management focus on existing businesses; |
• | impairment of other relationships; |
• | variability in revenue and income from entering into, amending, or terminating such agreements or relationships; and |
• | difficulty integrating under the commercial agreements. |
• | disruption of our ongoing business, including loss of management focus on existing businesses; |
• | problems retaining key personnel; |
• | additional operating losses and expenses of the businesses we acquired or in which we invested; |
• | the potential impairment of tangible and intangible assets and goodwill, including as a result of acquisitions; |
• | the potential impairment of customer and other relationships of the company we acquired or in which we invested or our own customers as a result of any integration of operations; |
• | the difficulty of completing such transactions and achieving anticipated benefits within expected timeframes, or at all; |
• | the difficulty of incorporating acquired operations, technology, and rights into our offerings, and unanticipated expenses related to such integration; |
• | the difficulty of integrating a new company’s accounting, financial reporting, management, information and information security, human resource, and other administrative systems to permit effective management, and the lack of control if such integration is delayed or not implemented; |
• | for investments in which an investee’s financial performance is incorporated into our financial results, either in full or in part, the dependence on the investee’s accounting, financial reporting, and similar systems, controls, and processes; |
• | the difficulty of implementing at companies we acquire the controls, procedures, and policies appropriate for a larger public company; |
• | the risks associated with businesses we acquire or invest in, which may differ from or be more significant than the risks our other businesses face; |
• | potential unknown liabilities associated with a company we acquire or in which we invest; and |
• | for foreign transactions, additional risks related to the integration of operations across different cultures and languages, and the economic, political, and regulatory risks associated with specific countries. |
• | changes in interest rates; |
• | conditions or trends in the Internet and the industry segments we operate in; |
• | quarterly variations in operating results; |
• | fluctuations in the stock market in general and market prices for Internet-related companies in particular; |
• | changes in financial estimates by us or securities analysts and recommendations by securities analysts; |
• | changes in our capital structure, including issuance of additional debt or equity to the public; |
• | changes in the valuation methodology of, or performance by, other e-commerce or technology companies; and |
• | transactions in our common stock by major investors and certain analyst reports, news, and speculation. |
Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
Description of Use | Leased Square Footage (1) | Owned Square Footage | Location | |||||
Office space | 16,642 | 3,901 | North America | |||||
Office space | 14,738 | — | International | |||||
Physical stores (2) | 19,176 | 724 | North America | |||||
Physical stores (2) | 173 | — | International | |||||
Fulfillment, data centers, and other | 153,917 | 4,467 | North America | |||||
Fulfillment, data centers, and other | 72,596 | 2,085 | International | |||||
Total | 277,242 | 11,177 | ||||||
(1) | For leased properties, represents the total leased space excluding sub-leased space. |
(2) | This includes 520 North America and 7 International stores as of December 31, 2018. |
Segment | Leased Square Footage (1) | Owned Square Footage (1) | ||||
North America | 165,503 | 1,977 | ||||
International | 70,619 | 895 | ||||
AWS | 9,740 | 4,404 | ||||
Total | 245,862 | 7,276 | ||||
(1) | Segment amounts exclude corporate facilities. Shared facilities are allocated among the segments based on usage and primarily relate to facilities that hold our technology infrastructure. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 10 — Segment Information.” |
Item 3. | Legal Proceedings |
Item 4. | Mine Safety Disclosures |
Item 5. | Market for the Registrant’s Common Stock, Related Shareholder Matters, and Issuer Purchases of Equity Securities |
Item 6. | Selected Consolidated Financial Data |
Year Ended December 31, | ||||||||||||||||||||
2014 | 2015 | 2016 | 2017 (1) | 2018 | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||
Statements of Operations: | ||||||||||||||||||||
Net sales | $ | 88,988 | $ | 107,006 | $ | 135,987 | $ | 177,866 | $ | 232,887 | ||||||||||
Operating income | $ | 178 | $ | 2,233 | $ | 4,186 | $ | 4,106 | $ | 12,421 | ||||||||||
Net income (loss) | $ | (241 | ) | $ | 596 | $ | 2,371 | $ | 3,033 | $ | 10,073 | |||||||||
Basic earnings per share (2) | $ | (0.52 | ) | $ | 1.28 | $ | 5.01 | $ | 6.32 | $ | 20.68 | |||||||||
Diluted earnings per share (2) | $ | (0.52 | ) | $ | 1.25 | $ | 4.90 | $ | 6.15 | $ | 20.14 | |||||||||
Weighted-average shares used in computation of earnings per share: | ||||||||||||||||||||
Basic | 462 | 467 | 474 | 480 | 487 | |||||||||||||||
Diluted | 462 | 477 | 484 | 493 | 500 | |||||||||||||||
Statements of Cash Flows: | ||||||||||||||||||||
Net cash provided by (used in) operating activities (3) | $ | 6,976 | $ | 11,909 | $ | 17,203 | $ | 18,365 | $ | 30,723 | ||||||||||
December 31, | ||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Balance Sheets: | ||||||||||||||||||||
Total assets | $ | 53,618 | $ | 64,747 | $ | 83,402 | $ | 131,310 | $ | 162,648 | ||||||||||
Total long-term obligations | $ | 14,794 | $ | 17,477 | $ | 20,301 | $ | 45,718 | $ | 50,708 | ||||||||||
(1) | We acquired Whole Foods Market on August 28, 2017. The results of Whole Foods Market have been included in our results of operation from the date of acquisition. |
(2) | For further discussion of earnings per share, see Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Description of Business and Accounting Policies.” |
(3) | As a result of the adoption of new accounting guidance, we retrospectively adjusted our consolidated statements of cash flows to add restricted cash to cash and cash equivalents, which restated cash provided by operating activities by $128 million, $(130) million, $(69) million, and $(69) million in 2014, 2015, 2016, and 2017. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 1 — Description of Business and Accounting Policies” for additional information. |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
(1) | See “Results of Operations — Non-GAAP Financial Measures” below for additional information on our non-GAAP free cash flows financial measures. |
(2) | Working capital consists of accounts receivable, inventory, and accounts payable. |
(3) | The operating cycle is the number of days of sales in inventory plus the number of days of sales in accounts receivable minus accounts payable days. |
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Cash provided by (used in): | |||||||||||
Operating activities | $ | 17,203 | $ | 18,365 | $ | 30,723 | |||||
Investing activities | (9,516 | ) | (27,084 | ) | (12,369 | ) | |||||
Financing activities | (3,716 | ) | 9,928 | (7,686 | ) | ||||||
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Net Sales: | |||||||||||
North America | $ | 79,785 | $ | 106,110 | $ | 141,366 | |||||
International | 43,983 | 54,297 | 65,866 | ||||||||
AWS | 12,219 | 17,459 | 25,655 | ||||||||
Consolidated | $ | 135,987 | $ | 177,866 | $ | 232,887 | |||||
Year-over-year Percentage Growth: | |||||||||||
North America | 25 | % | 33 | % | 33 | % | |||||
International | 24 | 23 | 21 | ||||||||
AWS | 55 | 43 | 47 | ||||||||
Consolidated | 27 | 31 | 31 | ||||||||
Year-over-year Percentage Growth, excluding the effect of foreign exchange rates: | |||||||||||
North America | 25 | % | 33 | % | 33 | % | |||||
International | 26 | 23 | 19 | ||||||||
AWS | 55 | 43 | 47 | ||||||||
Consolidated | 28 | 31 | 30 | ||||||||
Net sales mix: | |||||||||||
North America | 59 | % | 60 | % | 61 | % | |||||
International | 32 | 30 | 28 | ||||||||
AWS | 9 | 10 | 11 | ||||||||
Consolidated | 100 | % | 100 | % | 100 | % | |||||
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Operating Income (Loss): | |||||||||||
North America | $ | 2,361 | $ | 2,837 | $ | 7,267 | |||||
International | (1,283 | ) | (3,062 | ) | (2,142 | ) | |||||
AWS | 3,108 | 4,331 | 7,296 | ||||||||
Consolidated | $ | 4,186 | $ | 4,106 | $ | 12,421 | |||||
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Operating expenses: | |||||||||||
Cost of sales | $ | 88,265 | $ | 111,934 | $ | 139,156 | |||||
Fulfillment | 17,619 | 25,249 | 34,027 | ||||||||
Marketing | 7,233 | 10,069 | 13,814 | ||||||||
Technology and content | 16,085 | 22,620 | 28,837 | ||||||||
General and administrative | 2,432 | 3,674 | 4,336 | ||||||||
Other operating expense, net | 167 | 214 | 296 | ||||||||
Total operating expenses | $ | 131,801 | $ | 173,760 | $ | 220,466 | |||||
Year-over-year Percentage Growth: | |||||||||||
Cost of sales | 23 | % | 27 | % | 24 | % | |||||
Fulfillment | 31 | 43 | 35 | ||||||||
Marketing | 38 | 39 | 37 | ||||||||
Technology and content | 28 | 41 | 27 | ||||||||
General and administrative | 39 | 51 | 18 | ||||||||
Other operating expense, net | (2 | ) | 28 | 38 | |||||||
Percent of Net Sales: | |||||||||||
Cost of sales | 64.9 | % | 62.9 | % | 59.8 | % | |||||
Fulfillment | 13.0 | 14.2 | 14.6 | ||||||||
Marketing | 5.3 | 5.7 | 5.9 | ||||||||
Technology and content | 11.8 | 12.7 | 12.4 | ||||||||
General and administrative | 1.8 | 2.1 | 1.9 | ||||||||
Other operating expense, net | 0.1 | 0.1 | 0.1 | ||||||||
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Net cash provided by (used in) operating activities | $ | 17,203 | $ | 18,365 | $ | 30,723 | |||||
Purchases of property and equipment, net of proceeds from property and equipment incentives | (6,737 | ) | (10,058 | ) | (11,323 | ) | |||||
Free cash flow | $ | 10,466 | $ | 8,307 | $ | 19,400 | |||||
Net cash provided by (used in) investing activities | $ | (9,516 | ) | $ | (27,084 | ) | $ | (12,369 | ) | ||
Net cash provided by (used in) financing activities | $ | (3,716 | ) | $ | 9,928 | $ | (7,686 | ) | |||
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Net cash provided by (used in) operating activities | $ | 17,203 | $ | 18,365 | $ | 30,723 | |||||
Purchases of property and equipment, net of proceeds from property and equipment incentives | (6,737 | ) | (10,058 | ) | (11,323 | ) | |||||
Principal repayments of capital lease obligations | (3,860 | ) | (4,799 | ) | (7,449 | ) | |||||
Principal repayments of finance lease obligations | (147 | ) | (200 | ) | (337 | ) | |||||
Free cash flow less lease principal repayments | $ | 6,459 | $ | 3,308 | $ | 11,614 | |||||
Net cash provided by (used in) investing activities | $ | (9,516 | ) | $ | (27,084 | ) | $ | (12,369 | ) | ||
Net cash provided by (used in) financing activities | $ | (3,716 | ) | $ | 9,928 | $ | (7,686 | ) | |||
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Net cash provided by (used in) operating activities | $ | 17,203 | $ | 18,365 | $ | 30,723 | |||||
Purchases of property and equipment, net of proceeds from property and equipment incentives | (6,737 | ) | (10,058 | ) | (11,323 | ) | |||||
Property and equipment acquired under capital leases | (5,704 | ) | (9,637 | ) | (10,615 | ) | |||||
Principal repayments of finance lease obligations | (147 | ) | (200 | ) | (337 | ) | |||||
Free cash flow less finance lease principal repayments and assets acquired under capital leases | $ | 4,615 | $ | (1,530 | ) | $ | 8,448 | ||||
Net cash provided by (used in) investing activities | $ | (9,516 | ) | $ | (27,084 | ) | $ | (12,369 | ) | ||
Net cash provided by (used in) financing activities | $ | (3,716 | ) | $ | 9,928 | $ | (7,686 | ) | |||
Year Ended December 31, 2016 | Year Ended December 31, 2017 | Year Ended December 31, 2018 | |||||||||||||||||||||||||||||||||
As Reported | Exchange Rate Effect (1) | At Prior Year Rates (2) | As Reported | Exchange Rate Effect (1) | At Prior Year Rates (2) | As Reported | Exchange Rate Effect (1) | At Prior Year Rates (2) | |||||||||||||||||||||||||||
Net sales | $ | 135,987 | $ | 550 | $ | 136,537 | $ | 177,866 | $ | (210 | ) | $ | 177,656 | $ | 232,887 | $ | (1,253 | ) | $ | 231,634 | |||||||||||||||
Operating expenses | 131,801 | 660 | 132,461 | 173,760 | (352 | ) | 173,408 | 220,466 | (1,027 | ) | 219,439 | ||||||||||||||||||||||||
Operating income | 4,186 | (110 | ) | 4,076 | 4,106 | 142 | 4,248 | 12,421 | (226 | ) | 12,195 | ||||||||||||||||||||||||
(1) | Represents the change in reported amounts resulting from changes in foreign exchange rates from those in effect in the comparable prior year for operating results. |
(2) | Represents the outcome that would have resulted had foreign exchange rates in the reported period been the same as those in effect in the comparable prior year for operating results. |
• | Net sales are expected to be between $56 billion and $60 billion, or to grow between 10% and 18% compared with first quarter 2018. This guidance anticipates an unfavorable impact of approximately 210 basis points from foreign exchange rates. |
• | Operating income is expected to be between $2.3 billion and $3.3 billion, compared with $1.9 billion in first quarter 2018. |
• | This guidance assumes, among other things, that no additional business acquisitions, investments, restructurings, or legal settlements are concluded. |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | Estimated Fair Value as of December 31, 2018 | |||||||||||||||||||||||||
Money market funds | $ | 12,515 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 12,515 | $ | 12,515 | ||||||||||||||||
Weighted average interest rate | 1.16 | % | —% | —% | — | % | — | % | — | % | 1.16 | % | ||||||||||||||||||||
Corporate debt securities | 3,220 | 1,086 | 560 | 120 | 16 | — | 5,002 | 4,990 | ||||||||||||||||||||||||
Weighted average interest rate | 2.96 | % | 3.25 | % | 3.36 | % | 3.86 | % | 4.26 | % | — | % | 3.09 | % | ||||||||||||||||||
U.S. government and agency securities | 11,071 | 416 | 135 | 91 | 4 | — | 11,717 | 11,667 | ||||||||||||||||||||||||
Weighted average interest rate | 2.35 | % | 2.49 | % | 2.68 | % | 2.76 | % | 3.38 | % | — | % | 2.36 | % | ||||||||||||||||||
Asset-backed securities | 305 | 255 | 162 | 121 | 52 | — | 895 | 892 | ||||||||||||||||||||||||
Weighted average interest rate | 2.96 | % | 3.07 | % | 3.02 | % | 2.99 | % | 3.07 | % | — | % | 3.01 | % | ||||||||||||||||||
Foreign government and agency securities | 761 | 50 | 4 | — | — | — | 815 | 815 | ||||||||||||||||||||||||
Weighted average interest rate | 2.60 | % | 2.68 | % | 3.32 | % | — | % | — | % | — | % | 2.61 | % | ||||||||||||||||||
Other fixed income securities | 89 | 67 | 32 | — | — | — | 188 | 188 | ||||||||||||||||||||||||
Weighted average interest rate | 3.25 | % | 2.89 | % | 3.13 | % | — | % | — | % | — | % | 3.10 | % | ||||||||||||||||||
$ | 27,961 | $ | 1,874 | $ | 893 | $ | 332 | $ | 72 | $ | — | $ | 31,132 | |||||||||||||||||||
Cash equivalents and marketable fixed income securities | $ | 31,067 | ||||||||||||||||||||||||||||||
2.600% Notes due on December 5, 2019 | $ | 1,000 | |
1.900% Notes due on August 21, 2020 | $ | 1,000 | |
3.300% Notes due on December 5, 2021 | $ | 1,000 | |
2.500% Notes due on November 29, 2022 | $ | 1,250 | |
2.400% Notes due on February 22, 2023 | $ | 1,000 | |
2.800% Notes due on August 22, 2024 | $ | 2,000 | |
3.800% Notes due on December 5, 2024 | $ | 1,250 | |
5.200% Notes due on December 3, 2025 | $ | 1,000 | |
3.150% Notes due on August 22, 2027 | $ | 3,500 | |
4.800% Notes due on December 5, 2034 | $ | 1,250 | |
3.875% Notes due on August 22, 2037 | $ | 2,750 | |
4.950% Notes due on December 5, 2044 | $ | 1,500 | |
4.050% Notes due on August 22, 2047 | $ | 3,500 | |
4.250% Notes due on August 22, 2057 | $ | 2,250 | |
Item 8. | Financial Statements and Supplementary Data |
Page | |
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD | $ | 16,175 | $ | 19,934 | $ | 21,856 | |||||
OPERATING ACTIVITIES: | |||||||||||
Net income | 2,371 | 3,033 | 10,073 | ||||||||
Adjustments to reconcile net income to net cash from operating activities: | |||||||||||
Depreciation of property and equipment and other amortization, including capitalized content costs | 8,116 | 11,478 | 15,341 | ||||||||
Stock-based compensation | 2,975 | 4,215 | 5,418 | ||||||||
Other operating expense, net | 160 | 202 | 274 | ||||||||
Other expense (income), net | (20 | ) | (292 | ) | 219 | ||||||
Deferred income taxes | (246 | ) | (29 | ) | 441 | ||||||
Changes in operating assets and liabilities: | |||||||||||
Inventories | (1,426 | ) | (3,583 | ) | (1,314 | ) | |||||
Accounts receivable, net and other | (3,436 | ) | (4,780 | ) | (4,615 | ) | |||||
Accounts payable | 5,030 | 7,100 | 3,263 | ||||||||
Accrued expenses and other | 1,724 | 283 | 472 | ||||||||
Unearned revenue | 1,955 | 738 | 1,151 | ||||||||
Net cash provided by (used in) operating activities | 17,203 | 18,365 | 30,723 | ||||||||
INVESTING ACTIVITIES: | |||||||||||
Purchases of property and equipment | (7,804 | ) | (11,955 | ) | (13,427 | ) | |||||
Proceeds from property and equipment incentives | 1,067 | 1,897 | 2,104 | ||||||||
Acquisitions, net of cash acquired, and other | (116 | ) | (13,972 | ) | (2,186 | ) | |||||
Sales and maturities of marketable securities | 4,577 | 9,677 | 8,240 | ||||||||
Purchases of marketable securities | (7,240 | ) | (12,731 | ) | (7,100 | ) | |||||
Net cash provided by (used in) investing activities | (9,516 | ) | (27,084 | ) | (12,369 | ) | |||||
FINANCING ACTIVITIES: | |||||||||||
Proceeds from long-term debt and other | 618 | 16,228 | 768 | ||||||||
Repayments of long-term debt and other | (327 | ) | (1,301 | ) | (668 | ) | |||||
Principal repayments of capital lease obligations | (3,860 | ) | (4,799 | ) | (7,449 | ) | |||||
Principal repayments of finance lease obligations | (147 | ) | (200 | ) | (337 | ) | |||||
Net cash provided by (used in) financing activities | (3,716 | ) | 9,928 | (7,686 | ) | ||||||
Foreign currency effect on cash, cash equivalents, and restricted cash | (212 | ) | 713 | (351 | ) | ||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 3,759 | 1,922 | 10,317 | ||||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD | $ | 19,934 | $ | 21,856 | $ | 32,173 | |||||
SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||||||
Cash paid for interest on long-term debt | $ | 290 | $ | 328 | $ | 854 | |||||
Cash paid for interest on capital and finance lease obligations | 206 | 319 | 575 | ||||||||
Cash paid for income taxes, net of refunds | 412 | 957 | 1,184 | ||||||||
Property and equipment acquired under capital leases | 5,704 | 9,637 | 10,615 | ||||||||
Property and equipment acquired under build-to-suit leases | 1,209 | 3,541 | 3,641 | ||||||||
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Net product sales | $ | 94,665 | $ | 118,573 | $ | 141,915 | |||||
Net service sales | 41,322 | 59,293 | 90,972 | ||||||||
Total net sales | 135,987 | 177,866 | 232,887 | ||||||||
Operating expenses: | |||||||||||
Cost of sales | 88,265 | 111,934 | 139,156 | ||||||||
Fulfillment | 17,619 | 25,249 | 34,027 | ||||||||
Marketing | 7,233 | 10,069 | 13,814 | ||||||||
Technology and content | 16,085 | 22,620 | 28,837 | ||||||||
General and administrative | 2,432 | 3,674 | 4,336 | ||||||||
Other operating expense, net | 167 | 214 | 296 | ||||||||
Total operating expenses | 131,801 | 173,760 | 220,466 | ||||||||
Operating income | 4,186 | 4,106 | 12,421 | ||||||||
Interest income | 100 | 202 | 440 | ||||||||
Interest expense | (484 | ) | (848 | ) | (1,417 | ) | |||||
Other income (expense), net | 90 | 346 | (183 | ) | |||||||
Total non-operating income (expense) | (294 | ) | (300 | ) | (1,160 | ) | |||||
Income before income taxes | 3,892 | 3,806 | 11,261 | ||||||||
Provision for income taxes | (1,425 | ) | (769 | ) | (1,197 | ) | |||||
Equity-method investment activity, net of tax | (96 | ) | (4 | ) | 9 | ||||||
Net income | $ | 2,371 | $ | 3,033 | $ | 10,073 | |||||
Basic earnings per share | $ | 5.01 | $ | 6.32 | $ | 20.68 | |||||
Diluted earnings per share | $ | 4.90 | $ | 6.15 | $ | 20.14 | |||||
Weighted-average shares used in computation of earnings per share: | |||||||||||
Basic | 474 | 480 | 487 | ||||||||
Diluted | 484 | 493 | 500 | ||||||||
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Net income | $ | 2,371 | $ | 3,033 | $ | 10,073 | |||||
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustments, net of tax of $(49), $5, and $6 | (279 | ) | 533 | (538 | ) | ||||||
Net change in unrealized gains (losses) on available-for-sale debt securities: | |||||||||||
Unrealized gains (losses), net of tax of $(12), $5, and $0 | 9 | (39 | ) | (17 | ) | ||||||
Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $0, $0, and $0 | 8 | 7 | 8 | ||||||||
Net unrealized gains (losses) on available-for-sale debt securities | 17 | (32 | ) | (9 | ) | ||||||
Total other comprehensive income (loss) | (262 | ) | 501 | (547 | ) | ||||||
Comprehensive income | $ | 2,109 | $ | 3,534 | $ | 9,526 | |||||
December 31, | |||||||
2017 | 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 20,522 | $ | 31,750 | |||
Marketable securities | 10,464 | 9,500 | |||||
Inventories | 16,047 | 17,174 | |||||
Accounts receivable, net and other | 13,164 | 16,677 | |||||
Total current assets | 60,197 | 75,101 | |||||
Property and equipment, net | 48,866 | 61,797 | |||||
Goodwill | 13,350 | 14,548 | |||||
Other assets | 8,897 | 11,202 | |||||
Total assets | $ | 131,310 | $ | 162,648 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 34,616 | $ | 38,192 | |||
Accrued expenses and other | 18,170 | 23,663 | |||||
Unearned revenue | 5,097 | 6,536 | |||||
Total current liabilities | 57,883 | 68,391 | |||||
Long-term debt | 24,743 | 23,495 | |||||
Other long-term liabilities | 20,975 | 27,213 | |||||
Commitments and contingencies (Note 7) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.01 par value: | |||||||
Authorized shares — 500 | |||||||
Issued and outstanding shares — none | — | — | |||||
Common stock, $0.01 par value: | |||||||
Authorized shares — 5,000 | |||||||
Issued shares — 507 and 514 | |||||||
Outstanding shares — 484 and 491 | 5 | 5 | |||||
Treasury stock, at cost | (1,837 | ) | (1,837 | ) | |||
Additional paid-in capital | 21,389 | 26,791 | |||||
Accumulated other comprehensive loss | (484 | ) | (1,035 | ) | |||
Retained earnings | 8,636 | 19,625 | |||||
Total stockholders’ equity | 27,709 | 43,549 | |||||
Total liabilities and stockholders’ equity | $ | 131,310 | $ | 162,648 | |||
Common Stock | ||||||||||||||||||||||||||
Shares | Amount | Treasury Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders’ Equity | ||||||||||||||||||||
Balance as of January 1, 2016 | 471 | $ | 5 | $ | (1,837 | ) | $ | 13,394 | $ | (723 | ) | $ | 2,545 | $ | 13,384 | |||||||||||
Net income | — | — | — | — | — | 2,371 | 2,371 | |||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | (262 | ) | — | (262 | ) | |||||||||||||||||
Exercise of common stock options | 6 | — | — | 1 | — | — | 1 | |||||||||||||||||||
Excess tax benefits from stock-based compensation | — | — | — | 829 | — | — | 829 | |||||||||||||||||||
Stock-based compensation and issuance of employee benefit plan stock | — | — | — | 2,962 | — | — | 2,962 | |||||||||||||||||||
Balance as of December 31, 2016 | 477 | 5 | (1,837 | ) | 17,186 | (985 | ) | 4,916 | 19,285 | |||||||||||||||||
Cumulative effect of a change in accounting principle related to stock-based compensation | — | — | — | — | — | 687 | 687 | |||||||||||||||||||
Net income | — | — | — | — | — | 3,033 | 3,033 | |||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | 501 | — | 501 | |||||||||||||||||||
Exercise of common stock options | 7 | — | — | 1 | — | — | 1 | |||||||||||||||||||
Stock-based compensation and issuance of employee benefit plan stock | — | — | — | 4,202 | — | — | 4,202 | |||||||||||||||||||
Balance as of December 31, 2017 | 484 | 5 | (1,837 | ) | 21,389 | (484 | ) | 8,636 | 27,709 | |||||||||||||||||
Cumulative effect of changes in accounting principles related to revenue recognition, income taxes, and financial instruments | — | — | — | — | (4 | ) | 916 | 912 | ||||||||||||||||||
Net income | — | — | — | — | — | 10,073 | 10,073 | |||||||||||||||||||
Other comprehensive income (loss) | — | — | — | — | (547 | ) | — | (547 | ) | |||||||||||||||||
Exercise of common stock options | 7 | — | — | — | — | — | — | |||||||||||||||||||
Stock-based compensation and issuance of employee benefit plan stock | — | — | — | 5,402 | — | — | 5,402 | |||||||||||||||||||
Balance as of December 31, 2018 | 491 | $ | 5 | $ | (1,837 | ) | $ | 26,791 | $ | (1,035 | ) | $ | 19,625 | $ | 43,549 | |||||||||||
Year Ended December 31, | ||||||||
2016 | 2017 | 2018 | ||||||
Shares used in computation of basic earnings per share | 474 | 480 | 487 | |||||
Total dilutive effect of outstanding stock awards | 10 | 13 | 13 | |||||
Shares used in computation of diluted earnings per share | 484 | 493 | 500 | |||||
Year Ended December 31, 2016 | Previously Reported | Adjustments | As Revised | ||||||||
Operating activities | $ | 17,272 | $ | (69 | ) | $ | 17,203 | ||||
Investing activities | (9,876 | ) | 360 | (9,516 | ) | ||||||
Financing activities | (3,740 | ) | 24 | (3,716 | ) | ||||||
Net change in cash, cash equivalents, and restricted cash | $ | 3,656 | $ | 315 | $ | 3,971 | |||||
Year Ended December 31, 2017 | Previously Reported | Adjustments | As Revised | ||||||||
Operating activities | $ | 18,434 | $ | (69 | ) | $ | 18,365 | ||||
Investing activities | (27,819 | ) | 735 | (27,084 | ) | ||||||
Financing activities | 9,860 | 68 | 9,928 | ||||||||
Net change in cash, cash equivalents, and restricted cash | $ | 475 | $ | 734 | $ | 1,209 | |||||
December 31, 2017 | |||||||||||||||
Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Total Estimated Fair Value | ||||||||||||
Cash | $ | 9,982 | $ | — | $ | — | $ | 9,982 | |||||||
Level 1 securities: | |||||||||||||||
Money market funds | 11,343 | — | — | 11,343 | |||||||||||
Equity securities | 23 | 30 | — | 53 | |||||||||||
Level 2 securities: | |||||||||||||||
Foreign government and agency securities | 620 | — | — | 620 | |||||||||||
U.S. government and agency securities | 4,841 | 1 | (19 | ) | 4,823 | ||||||||||
Corporate debt securities | 4,265 | 1 | (9 | ) | 4,257 | ||||||||||
Asset-backed securities | 910 | — | (5 | ) | 905 | ||||||||||
Other fixed income securities | 340 | — | (2 | ) | 338 | ||||||||||
$ | 32,324 | $ | 32 | $ | (35 | ) | $ | 32,321 | |||||||
Less: Restricted cash, cash equivalents, and marketable securities (1) | (1,335 | ) | |||||||||||||
Total cash, cash equivalents, and marketable securities | $ | 30,986 | |||||||||||||
December 31, 2018 | |||||||||||||||
Cost or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Total Estimated Fair Value | ||||||||||||
Cash | $ | 10,406 | $ | — | $ | — | $ | 10,406 | |||||||
Level 1 securities: | |||||||||||||||
Money market funds | 12,515 | — | — | 12,515 | |||||||||||
Equity securities | 29 | 143 | (2 | ) | 170 | ||||||||||
Level 2 securities: | |||||||||||||||
Foreign government and agency securities | 815 | — | — | 815 | |||||||||||
U.S. government and agency securities | 11,686 | 1 | (20 | ) | 11,667 | ||||||||||
Corporate debt securities | 5,008 | 1 | (19 | ) | 4,990 | ||||||||||
Asset-backed securities | 896 | — | (4 | ) | 892 | ||||||||||
Other fixed income securities | 190 | — | (2 | ) | 188 | ||||||||||
Equity securities | 28 | 5 | — | 33 | |||||||||||
$ | 41,573 | $ | 150 | $ | (47 | ) | $ | 41,676 | |||||||
Less: Restricted cash, cash equivalents, and marketable securities (1) | (426 | ) | |||||||||||||
Total cash, cash equivalents, and marketable securities | $ | 41,250 | |||||||||||||
(1) | We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable securities as collateral for real estate leases, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 7 — Commitments and Contingencies.” |
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Realized gains | $ | 3 | $ | 5 | $ | 2 | |||||
Realized losses | 11 | 11 | 9 | ||||||||
Amortized Cost | Estimated Fair Value | ||||||
Due within one year | $ | 27,520 | $ | 27,508 | |||
Due after one year through five years | 2,865 | 2,845 | |||||
Due after five years through ten years | 187 | 185 | |||||
Due after ten years | 538 | 529 | |||||
Total | $ | 31,110 | $ | 31,067 | |||
December 31, 2017 | December 31, 2018 | ||||||
Cash and cash equivalents | $ | 20,522 | $ | 31,750 | |||
Restricted cash included in accounts receivable, net and other | 1,329 | 418 | |||||
Restricted cash included in other assets | 5 | 5 | |||||
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows | $ | 21,856 | $ | 32,173 | |||
December 31, | |||||||
2017 | 2018 | ||||||
Gross property and equipment (1): | |||||||
Land and buildings | $ | 23,896 | $ | 31,741 | |||
Equipment | 42,244 | 54,591 | |||||
Other assets | 2,438 | 2,577 | |||||
Construction in progress | 4,078 | 6,861 | |||||
Gross property and equipment | 72,656 | 95,770 | |||||
Total accumulated depreciation and amortization (1) | 23,790 | 33,973 | |||||
Total property and equipment, net | $ | 48,866 | $ | 61,797 | |||
(1) | We revised our prior year presentation of gross property and equipment and total accumulated depreciation and amortization to include all property and equipment in service, including equipment which is fully-depreciated, to conform to the current year presentation. Total property and equipment, net remains unchanged for the prior year. |
December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Purchase Price | |||||||||||
Cash paid, net of cash acquired | $ | 81 | $ | 13,859 | $ | 1,618 | |||||
Indemnification holdback | 22 | 104 | 31 | ||||||||
$ | 103 | $ | 13,963 | $ | 1,649 | ||||||
Allocation | |||||||||||
Goodwill | $ | 60 | $ | 9,501 | $ | 1,228 | |||||
Intangible assets (1): | |||||||||||
Marketing-related | 2 | 1,987 | 186 | ||||||||
Contract-based | 1 | 440 | 13 | ||||||||
Technology-based | 53 | 166 | 285 | ||||||||
Customer-related | 1 | 54 | 193 | ||||||||
57 | 2,647 | 677 | |||||||||
Property and equipment | 3 | 3,810 | 11 | ||||||||
Deferred tax assets | 17 | 117 | 174 | ||||||||
Other assets acquired | 10 | 1,858 | 282 | ||||||||
Long-term debt | (5 | ) | (1,165 | ) | (176 | ) | |||||
Deferred tax liabilities | (18 | ) | (961 | ) | (159 | ) | |||||
Other liabilities assumed | (21 | ) | (1,844 | ) | (388 | ) | |||||
$ | 103 | $ | 13,963 | $ | 1,649 | ||||||
(1) | Intangible assets acquired in 2016, 2017, and 2018 have estimated useful lives of between one and seven years, one and twenty-five years, and two and seven years, with weighted-average amortization periods of five years, twenty-one years, and six years. |
North America | International | AWS | Consolidated | ||||||||||||
Goodwill - January 1, 2017 | $ | 2,044 | $ | 694 | $ | 1,046 | $ | 3,784 | |||||||
New acquisitions (1) | 9,115 | 368 | 18 | 9,501 | |||||||||||
Other adjustments (2) | 6 | 46 | 13 | 65 | |||||||||||
Goodwill - December 31, 2017 | 11,165 | 1,108 | 1,077 | 13,350 | |||||||||||
New acquisitions (1) | 1,031 | 177 | 20 | 1,228 | |||||||||||
Other adjustments (2) | (5 | ) | (15 | ) | (10 | ) | (30 | ) | |||||||
Goodwill - December 31, 2018 | $ | 12,191 | $ | 1,270 | $ | 1,087 | $ | 14,548 | |||||||
(1) | Primarily includes the acquisition of Whole Foods Market in the North America segment and Souq in the International segment in 2017 and the acquisitions of Ring and PillPack in the North America segment in 2018. |
(2) | Primarily includes changes in foreign exchange rates. |
December 31, | |||||||||||||||||||||||||
2017 | 2018 | ||||||||||||||||||||||||
Acquired Intangibles, Gross (1) | Accumulated Amortization (1) | Acquired Intangibles, Net | Acquired Intangibles, Gross (1) | Accumulated Amortization (1) | Acquired Intangibles, Net | Weighted Average Life Remaining | |||||||||||||||||||
Marketing-related | $ | 2,486 | $ | (418 | ) | $ | 2,068 | $ | 2,542 | $ | (431 | ) | $ | 2,111 | 21.2 | ||||||||||
Contract-based | 1,013 | (213 | ) | 800 | 1,430 | (224 | ) | 1,206 | 12.3 | ||||||||||||||||
Technology- and content-based | 640 | (252 | ) | 388 | 941 | (377 | ) | 564 | 4.6 | ||||||||||||||||
Customer-related | 283 | (168 | ) | 115 | 437 | (208 | ) | 229 | 4.4 | ||||||||||||||||
Acquired intangibles (2) | $ | 4,422 | $ | (1,051 | ) | $ | 3,371 | $ | 5,350 | $ | (1,240 | ) | $ | 4,110 | 15.4 | ||||||||||
(1) | Excludes the original cost and accumulated amortization of fully-amortized intangibles. |
(2) | Intangible assets have estimated useful lives of between one and twenty-five years. |
Year Ended December 31, | |||
2019 | $ | 511 | |
2020 | 412 | ||
2021 | 355 | ||
2022 | 323 | ||
2023 | 270 | ||
Thereafter | 2,217 | ||
$ | 4,088 | ||
December 31, | |||||||
2017 | 2018 | ||||||
2.600% Notes due on December 5, 2019 (2) | 1,000 | 1,000 | |||||
1.900% Notes due on August 21, 2020 (3) | 1,000 | 1,000 | |||||
3.300% Notes due on December 5, 2021 (2) | 1,000 | 1,000 | |||||
2.500% Notes due on November 29, 2022 (1) | 1,250 | 1,250 | |||||
2.400% Notes due on February 22, 2023 (3) | 1,000 | 1,000 | |||||
2.800% Notes due on August 22, 2024 (3) | 2,000 | 2,000 | |||||
3.800% Notes due on December 5, 2024 (2) | 1,250 | 1,250 | |||||
5.200% Notes due on December 3, 2025 (4) | 1,000 | 1,000 | |||||
3.150% Notes due on August 22, 2027 (3) | 3,500 | 3,500 | |||||
4.800% Notes due on December 5, 2034 (2) | 1,250 | 1,250 | |||||
3.875% Notes due on August 22, 2037 (3) | 2,750 | 2,750 | |||||
4.950% Notes due on December 5, 2044 (2) | 1,500 | 1,500 | |||||
4.050% Notes due on August 22, 2047 (3) | 3,500 | 3,500 | |||||
4.250% Notes due on August 22, 2057 (3) | 2,250 | 2,250 | |||||
Credit Facility | 592 | 594 | |||||
Other long-term debt | 100 | 121 | |||||
Total debt | 24,942 | 24,965 | |||||
Less current portion of long-term debt | (100 | ) | (1,371 | ) | |||
Face value of long-term debt | $ | 24,842 | $ | 23,594 | |||
(1) | Issued in November 2012, effective interest rate of the 2022 Notes was 2.66%. |
(2) | Issued in December 2014, effective interest rates of the 2019, 2021, 2024, 2034, and 2044 Notes were 2.73%, 3.43%, 3.90%, 4.92%, and 5.11%. |
(3) | Issued in August 2017, effective interest rates of the 2020, 2023, 2024, 2027, 2037, 2047, and 2057 Notes were 2.16%, 2.56%, 2.95%, 3.25%, 3.94%, 4.13%, and 4.33%. |
(4) | Consists of $872 million of 2025 Notes issued in December 2017 in exchange for notes assumed in connection with the acquisition of Whole Foods Market and $128 million of 2025 Notes issued by Whole Foods Market that did not participate in our December 2017 exchange offer. The effective interest rate of the 2025 Notes was 3.02%. |
Year Ended December 31, | |||
2019 | $ | 1,371 | |
2020 | 1,298 | ||
2021 | 1,016 | ||
2022 | 1,266 | ||
2023 | 1,014 | ||
Thereafter | 19,000 | ||
$ | 24,965 | ||
December 31, | |||||||
2017 | 2018 | ||||||
Long-term capital lease obligations | $ | 8,438 | $ | 9,650 | |||
Long-term finance lease obligations | 4,745 | 6,642 | |||||
Construction liabilities | 1,350 | 2,516 | |||||
Tax contingencies | 1,004 | 896 | |||||
Long-term deferred tax liabilities | 990 | 1,490 | |||||
Other | 4,448 | 6,019 | |||||
Total other long-term liabilities | $ | 20,975 | $ | 27,213 | |||
December 31, 2018 | |||
Gross capital lease obligations | $ | 17,952 | |
Less imputed interest | (582 | ) | |
Present value of net minimum lease payments | 17,370 | ||
Less current portion of capital lease obligations | (7,720 | ) | |
Total long-term capital lease obligations | $ | 9,650 | |
December 31, 2018 | |||
Gross finance lease obligations | $ | 8,376 | |
Less imputed interest | (1,323 | ) | |
Present value of net minimum lease payments | 7,053 | ||
Less current portion of finance lease obligations | (411 | ) | |
Total long-term finance lease obligations | $ | 6,642 | |
Year Ended December 31, | |||||||||||||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | |||||||||||||||||||||
Debt principal and interest | $ | 2,277 | $ | 2,161 | $ | 1,861 | $ | 2,078 | $ | 1,781 | $ | 30,013 | $ | 40,171 | |||||||||||||
Capital lease obligations, including interest (1) | 7,807 | 5,742 | 2,725 | 704 | 473 | 501 | 17,952 | ||||||||||||||||||||
Finance lease obligations, including interest (2) | 628 | 640 | 652 | 664 | 675 | 5,117 | 8,376 | ||||||||||||||||||||
Operating leases | 3,127 | 3,070 | 2,775 | 2,473 | 2,195 | 13,026 | 26,666 | ||||||||||||||||||||
Unconditional purchase obligations (3) | 3,523 | 4,103 | 3,291 | 3,098 | 2,974 | 5,204 | 22,193 | ||||||||||||||||||||
Other commitments (4) (5) | 2,618 | 1,455 | 1,056 | 843 | 808 | 8,875 | 15,655 | ||||||||||||||||||||
Total commitments | $ | 19,980 | $ | 17,171 | $ | 12,360 | $ | 9,860 | $ | 8,906 | $ | 62,736 | $ | 131,013 | |||||||||||||
(1) | Excluding interest, current capital lease obligations of $5.8 billion and $7.7 billion are recorded within “Accrued expenses and other” as of December 31, 2017 and 2018, and $8.4 billion and $9.6 billion are recorded within “Other long-term liabilities” as of December 31, 2017 and 2018. |
(2) | Excluding interest, current finance lease obligations of $282 million and $411 million are recorded within “Accrued expenses and other” as of December 31, 2017 and 2018, and $4.7 billion and $6.6 billion are recorded within “Other long-term liabilities” as of December 31, 2017 and 2018. |
(3) | Includes unconditional purchase obligations related to certain products offered in our Whole Foods Market stores and long-term agreements to acquire and license digital media content that are not reflected on the consolidated balance sheets. For those digital media content agreements with variable terms, we do not estimate the total obligation beyond any minimum quantities and/or pricing as of the reporting date. Purchase obligations associated with renewal provisions solely at the option of the content provider are included to the extent such commitments are fixed or a minimum amount is specified. |
(4) | Includes the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements and equipment lease arrangements that have not been placed in service and digital media content liabilities associated with long-term digital media content assets with initial terms greater than one year. |
(5) | Excludes approximately $3.4 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any. |
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Cost of sales | $ | 16 | $ | 47 | $ | 73 | |||||
Fulfillment | 657 | 911 | 1,121 | ||||||||
Marketing | 323 | 511 | 769 | ||||||||
Technology and content | 1,664 | 2,305 | 2,888 | ||||||||
General and administrative | 315 | 441 | 567 | ||||||||
Total stock-based compensation expense (1) | $ | 2,975 | $ | 4,215 | $ | 5,418 | |||||
(1) | The related tax benefits were $907 million, $860 million, and $1.1 billion for 2016, 2017, and 2018. In 2017 and 2018, the tax benefit reflects the permanent reduction in the U.S. statutory corporate tax rate from 35% to 21%. |
Number of Units | Weighted Average Grant-Date Fair Value | |||||
Outstanding as of January 1, 2016 | 18.9 | $ | 362 | |||
Units granted | 9.3 | 660 | ||||
Units vested | (6.1 | ) | 321 | |||
Units forfeited | (2.3 | ) | 440 | |||
Outstanding as of December 31, 2016 | 19.8 | 506 | ||||
Units granted | 8.9 | 946 | ||||
Units vested | (6.8 | ) | 400 | |||
Units forfeited | (1.8 | ) | 649 | |||
Outstanding as of December 31, 2017 | 20.1 | 725 | ||||
Units granted | 5.0 | 1,522 | ||||
Units vested | (7.1 | ) | 578 | |||
Units forfeited | (2.1 | ) | 862 | |||
Outstanding as of December 31, 2018 | 15.9 | $ | 1,024 | |||
Year Ended | ||||||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | ||||||||||||||
Scheduled vesting — restricted stock units | 6.9 | 5.6 | 2.4 | 0.8 | 0.1 | 0.1 | 15.9 | |||||||||||||
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Current taxes: | |||||||||||
U.S. Federal | $ | 1,136 | $ | (137 | ) | $ | (129 | ) | |||
U.S. State | 208 | 211 | 322 | ||||||||
International | 327 | 724 | 563 | ||||||||
Current taxes | 1,671 | 798 | 756 | ||||||||
Deferred taxes: | |||||||||||
U.S. Federal | 116 | (202 | ) | 565 | |||||||
U.S. State | (31 | ) | (26 | ) | 5 | ||||||
International | (331 | ) | 199 | (129 | ) | ||||||
Deferred taxes | (246 | ) | (29 | ) | 441 | ||||||
Provision for income taxes, net | $ | 1,425 | $ | 769 | $ | 1,197 | |||||
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
U.S. | $ | 4,551 | $ | 5,630 | $ | 11,157 | |||||
International | (659 | ) | (1,824 | ) | 104 | ||||||
Income before income taxes | $ | 3,892 | $ | 3,806 | $ | 11,261 | |||||
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Income taxes computed at the federal statutory rate (1) | $ | 1,362 | $ | 1,332 | $ | 2,365 | |||||
Effect of: | |||||||||||
Tax impact of foreign earnings | (69 | ) | 1,178 | 119 | |||||||
State taxes, net of federal benefits | 110 | 114 | 263 | ||||||||
Tax credits | (119 | ) | (220 | ) | (419 | ) | |||||
Stock-based compensation (2) | 189 | (917 | ) | (1,086 | ) | ||||||
Domestic production activities deduction | (94 | ) | — | — | |||||||
2017 Impact of U.S. Tax Act | — | (789 | ) | (157 | ) | ||||||
Other, net | 46 | 71 | 112 | ||||||||
Total | $ | 1,425 | $ | 769 | $ | 1,197 | |||||
(1) | The U.S. Tax Act reduced the U.S. federal statutory rate from 35% to 21% beginning in 2018. |
(2) | Includes non-deductible stock-based compensation and beginning in 2017, excess tax benefits from stock-based compensation. For 2017 and 2018, our tax provision includes $1.3 billion and $1.6 billion of excess tax benefits from stock-based compensation. |
December 31, | |||||||
2017 | 2018 | ||||||
Deferred tax assets (1): | |||||||
Loss carryforwards U.S. - Federal/States | $ | 211 | $ | 222 | |||
Loss carryforwards - Foreign | 2,149 | 2,551 | |||||
Accrued liabilities, reserves, and other expenses | 901 | 1,064 | |||||
Stock-based compensation | 1,026 | 1,293 | |||||
Deferred revenue | 349 | 321 | |||||
Assets held for investment | 35 | 69 | |||||
Depreciation and amortization | 279 | 2,386 | |||||
Other items | 167 | 94 | |||||
Tax credits | 381 | 734 | |||||
Total gross deferred tax assets | 5,498 | 8,734 | |||||
Less valuation allowance (2) | (2,538 | ) | (4,950 | ) | |||
Deferred tax assets, net of valuation allowance | 2,960 | 3,784 | |||||
Deferred tax liabilities: | |||||||
Depreciation and amortization | (2,568 | ) | (3,579 | ) | |||
Acquisition related intangible assets | (531 | ) | (682 | ) | |||
Other items | (58 | ) | (67 | ) | |||
Net deferred tax assets (liabilities), net of valuation allowance | $ | (197 | ) | $ | (544 | ) | |
(1) | Deferred tax assets are presented net of tax contingencies. |
(2) | Relates primarily to deferred tax assets that would only be realizable upon the generation of net income in certain foreign taxing jurisdictions and future capital gains. |
December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Gross tax contingencies – January 1 | $ | 1,181 | $ | 1,710 | $ | 2,309 | |||||
Gross increases to tax positions in prior periods | 355 | 223 | 164 | ||||||||
Gross decreases to tax positions in prior periods | (133 | ) | (139 | ) | (90 | ) | |||||
Gross increases to current period tax positions | 308 | 518 | 1,088 | ||||||||
Settlements with tax authorities | — | — | (36 | ) | |||||||
Lapse of statute of limitations | (1 | ) | (3 | ) | (21 | ) | |||||
Gross tax contingencies – December 31 (1) | $ | 1,710 | $ | 2,309 | $ | 3,414 | |||||
(1) | As of December 31, 2018, we had approximately $3.4 billion of accrued tax contingencies, of which $1.7 billion, if fully recognized, would decrease our effective tax rate. |
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
North America | |||||||||||
Net sales | $ | 79,785 | $ | 106,110 | $ | 141,366 | |||||
Operating expenses | 77,424 | 103,273 | 134,099 | ||||||||
Operating income | $ | 2,361 | $ | 2,837 | $ | 7,267 | |||||
International | |||||||||||
Net sales | $ | 43,983 | $ | 54,297 | $ | 65,866 | |||||
Operating expenses | 45,266 | 57,359 | 68,008 | ||||||||
Operating income (loss) | $ | (1,283 | ) | $ | (3,062 | ) | $ | (2,142 | ) | ||
AWS | |||||||||||
Net sales | $ | 12,219 | $ | 17,459 | $ | 25,655 | |||||
Operating expenses | 9,111 | 13,128 | 18,359 | ||||||||
Operating income | $ | 3,108 | $ | 4,331 | $ | 7,296 | |||||
Consolidated | |||||||||||
Net sales | $ | 135,987 | $ | 177,866 | $ | 232,887 | |||||
Operating expenses | 131,801 | 173,760 | 220,466 | ||||||||
Operating income | 4,186 | 4,106 | 12,421 | ||||||||
Total non-operating income (expense) | (294 | ) | (300 | ) | (1,160 | ) | |||||
Provision for income taxes | (1,425 | ) | (769 | ) | (1,197 | ) | |||||
Equity-method investment activity, net of tax | (96 | ) | (4 | ) | 9 | ||||||
Net income | $ | 2,371 | $ | 3,033 | $ | 10,073 | |||||
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
Net Sales: | |||||||||||
Online stores (1) | $ | 91,431 | $ | 108,354 | $ | 122,987 | |||||
Physical stores (2) | — | 5,798 | 17,224 | ||||||||
Third-party seller services (3) | 22,993 | 31,881 | 42,745 | ||||||||
Subscription services (4) | 6,394 | 9,721 | 14,168 | ||||||||
AWS | 12,219 | 17,459 | 25,655 | ||||||||
Other (5) | 2,950 | 4,653 | 10,108 | ||||||||
Consolidated | $ | 135,987 | $ | 177,866 | $ | 232,887 | |||||
(1) | Includes product sales and digital media content where we record revenue gross. We leverage our retail infrastructure to offer a wide selection of consumable and durable goods that includes media products available in both a physical and digital format, such as books, music, videos, games, and software. These product sales include digital products sold on a transactional basis. Digital product subscriptions that provide unlimited viewing or usage rights are included in Subscription services. |
(2) | Includes product sales where our customers physically select items in a store. |
(3) | Includes commissions and any related fulfillment and shipping fees, and other third-party seller services. |
(4) | Includes annual and monthly fees associated with Amazon Prime memberships, as well as audiobook, digital video, e-book, digital music, and other non-AWS subscription services. |
(5) | Primarily includes sales of advertising services, as well as sales related to our other service offerings. |
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
United States | $ | 90,349 | $ | 120,486 | $ | 160,146 | |||||
Germany | 14,148 | 16,951 | 19,881 | ||||||||
United Kingdom | 9,547 | 11,372 | 14,524 | ||||||||
Japan | 10,797 | 11,907 | 13,829 | ||||||||
Rest of world | 11,146 | 17,150 | 24,507 | ||||||||
Consolidated | $ | 135,987 | $ | 177,866 | $ | 232,887 | |||||
December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
North America (1) | $ | 22,225 | $ | 35,844 | $ | 47,251 | |||||
International (1) | 10,429 | 18,014 | 19,923 | ||||||||
AWS (2) | 12,698 | 18,660 | 26,340 | ||||||||
Corporate | 38,050 | 58,792 | 69,134 | ||||||||
Consolidated | $ | 83,402 | $ | 131,310 | $ | 162,648 | |||||
(1) | North America and International segment assets primarily consist of property and equipment, inventory, and accounts receivable. |
(2) | AWS segment assets primarily consist of property and equipment and accounts receivable. |
December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
North America | $ | 10,143 | $ | 20,401 | $ | 27,052 | |||||
International | 3,448 | 7,425 | 8,552 | ||||||||
AWS | 10,300 | 14,885 | 18,851 | ||||||||
Corporate | 5,223 | 6,155 | 7,342 | ||||||||
Consolidated | $ | 29,114 | $ | 48,866 | $ | 61,797 | |||||
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
North America (1) | $ | 5,132 | $ | 13,200 | $ | 10,749 | |||||
International (1) | 1,680 | 5,196 | 2,476 | ||||||||
AWS (2) | 5,193 | 9,190 | 9,783 | ||||||||
Corporate | 1,580 | 2,197 | 2,060 | ||||||||
Consolidated | $ | 13,585 | $ | 29,783 | $ | 25,068 | |||||
(1) | Includes property and equipment added under capital leases of $1.5 billion, $2.9 billion, and $2.0 billion in 2016, 2017, and 2018, and under other financing arrangements of $849 million, $2.9 billion, and $3.0 billion in 2016, 2017, and 2018. |
(2) | Includes property and equipment added under capital leases of $4.0 billion, $7.3 billion, and $8.4 billion in 2016, 2017, and 2018, and under finance leases of $75 million, $134 million, and $245 million in 2016, 2017, and 2018. |
Year Ended December 31, | |||||||||||
2016 | 2017 | 2018 | |||||||||
North America | $ | 1,971 | $ | 3,029 | $ | 4,415 | |||||
International | 930 | 1,278 | 1,628 | ||||||||
AWS | 3,461 | 4,524 | 6,095 | ||||||||
Consolidated | $ | 6,362 | $ | 8,831 | $ | 12,138 | |||||
Year Ended December 31, 2017 (1) | ||||||||||||||||
First Quarter | Second Quarter | Third Quarter (2) | Fourth Quarter (2) | |||||||||||||
Net sales | $ | 35,714 | $ | 37,955 | $ | 43,744 | $ | 60,453 | ||||||||
Operating income | 1,005 | 628 | 347 | 2,127 | ||||||||||||
Income before income taxes | 953 | 666 | 316 | 1,872 | ||||||||||||
Provision for income taxes | (229 | ) | (467 | ) | (58 | ) | (16 | ) | ||||||||
Net income | 724 | 197 | 256 | 1,856 | ||||||||||||
Basic earnings per share | 1.52 | 0.41 | 0.53 | 3.85 | ||||||||||||
Diluted earnings per share | 1.48 | 0.40 | 0.52 | 3.75 | ||||||||||||
Shares used in computation of earnings per share: | ||||||||||||||||
Basic | 477 | 479 | 481 | 483 | ||||||||||||
Diluted | 490 | 492 | 494 | 496 | ||||||||||||
Year Ended December 31, 2018 (1) | ||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||
Net sales | $ | 51,042 | $ | 52,886 | $ | 56,576 | $ | 72,383 | ||||||||
Operating income | 1,927 | 2,983 | 3,724 | 3,786 | ||||||||||||
Income before income taxes | 1,916 | 2,605 | 3,390 | 3,350 | ||||||||||||
Provision for income taxes | (287 | ) | (74 | ) | (508 | ) | (327 | ) | ||||||||
Net income | 1,629 | 2,534 | 2,883 | 3,027 | ||||||||||||
Basic earnings per share | 3.36 | 5.21 | 5.91 | 6.18 | ||||||||||||
Diluted earnings per share | 3.27 | 5.07 | 5.75 | 6.04 | ||||||||||||
Shares used in computation of earnings per share: | ||||||||||||||||
Basic | 484 | 486 | 488 | 490 | ||||||||||||
Diluted | 498 | 500 | 501 | 501 | ||||||||||||
(1) | The sum of quarterly amounts, including per share amounts, may not equal amounts reported for year-to-date periods. This is due to the effects of rounding and changes in the number of weighted-average shares outstanding for each period. |
(2) | We acquired Whole Foods Market on August 28, 2017. The results of Whole Foods Market have been included in our results of operation from the date of acquisition. See Item 8 of Part II, “Financial Statements and Supplementary Data — Note 4 — Acquisitions, Goodwill, and Acquired Intangible Assets” for additional information regarding this transaction. |
Item 9. | Changes in and Disagreements with Accountants On Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
Item 9B. | Other Information |
Item 10. | Directors, Executive Officers, and Corporate Governance |
Item 11. | Executive Compensation |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters |
Item 13. | Certain Relationships and Related Transactions, and Director Independence |
Item 14. | Principal Accountant Fees and Services |
Item 15. | Exhibits, Financial Statement Schedules |
Exhibit Number | Description | |
3.1 | ||
3.2 | ||
4.1 | ||
4.2 | ||
4.3 | ||
4.4 | ||
4.5 | ||
10.1† | ||
10.2† | ||
10.3† | ||
10.4† | ||
10.5† | ||
10.6† | ||
10.7† | ||
10.8 | ||
10.9+ | ||
21.1 | ||
23.1 | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101 | The following financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, formatted in XBRL: (i) Consolidated Statements of Cash Flows, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Balance Sheets, (v) Consolidated Statements of Stockholders’ Equity, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags. | |
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Company has not filed with this Annual Report on Form 10-K certain instruments defining the rights of holders of long-term debt of the Company and its subsidiaries because the total amount of securities authorized thereunder does not exceed 10 percent of the total assets of the Company and its subsidiaries on a consolidated basis. The Company agrees to furnish a copy of such agreements to the Commission upon request. | ||
* | Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule and/or exhibit upon request. |
+ | Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. |
Item 16. | Form 10-K Summary |
AMAZON.COM, INC. | ||
By: | /s/ Jeffrey P. Bezos | |
Jeffrey P. Bezos | ||
President, Chief Executive Officer, and Chairman of the Board | ||
Signature | Title | |
/s/ Jeffrey P. Bezos | ||
Jeffrey P. Bezos | Chairman of the Board, President, and Chief Executive Officer (Principal Executive Officer) | |
/s/ Brian T. Olsavsky | ||
Brian T. Olsavsky | Senior Vice President and Chief Financial Officer (Principal Financial Officer) | |
/s/ Shelley L. Reynolds | ||
Shelley L. Reynolds | Vice President, Worldwide Controller (Principal Accounting Officer) | |
/s/ Tom A. Alberg | ||
Tom A. Alberg | Director | |
/s/ Jamie S. Gorelick | ||
Jamie S. Gorelick | Director | |
/s/ Daniel P. Huttenlocher | ||
Daniel P. Huttenlocher | Director | |
/s/ Judith A. McGrath | ||
Judith A. McGrath | Director | |
/s/ Jonathan J. Rubinstein | ||
Jonathan J. Rubinstein | Director | |
/s/ Thomas O. Ryder | ||
Thomas O. Ryder | Director | |
/s/ Patricia Q. Stonesifer | ||
Patricia Q. Stonesifer | Director | |
/s/ Wendell P. Weeks | ||
Wendell P. Weeks | Director | |